(2_FIDELITY_LOGOS)FIDELITY
SELECT
PORTFOLIOS(REGISTERED TRADEMARK)
AIR TRANSPORTATION
AMERICAN GOLD
AUTOMOTIVE
BIOTECHNOLOGY
BROKERAGE AND INVESTMENT MANAGEMENT
CHEMICALS
COMPUTERS
CONSTRUCTION AND HOUSING
CONSUMER PRODUCTS
DEFENSE AND AEROSPACE
DEVELOPING COMMUNICATIONS
ELECTRONICS
ENERGY
ENERGY SERVICE
ENVIRONMENTAL SERVICES
FINANCIAL SERVICES
FOOD AND AGRICULTURE
HEALTH CARE
HOME FINANCE
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
INSURANCE
LEISURE
MEDICAL DELIVERY
MONEY MARKET
MULTIMEDIA
NATURAL GAS
PAPER AND FOREST PRODUCTS
PRECIOUS METALS AND MINERALS
REGIONAL BANKS
RETAILING
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
TRANSPORTATION
UTILITIES GROWTH
ANNUAL REPORT
FOR THE YEAR ENDING
FEBRUARY 28, 1995
AND
PROSPECTUS
DATED APRIL 29, 1995
CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PERFORMANCE OVERVIEW AND
MARKET RECAP A-2
FUND UPDATES*
CONSUMER SECTOR CONSUMER PRODUCTS
FOOD AND AGRICULTURE
LEISURE
MULTIMEDIA
RETAILING
CYCLICALS SECTOR AIR TRANSPORTATION
AUTOMOTIVE
CHEMICALS
CONSTRUCTION AND HOUSING
ENVIRONMENTAL SERVICES
INDUSTRIAL EQUIPMENT
INDUSTRIAL MATERIALS
PAPER AND FOREST PRODUCTS
TRANSPORTATION
ENERGY, UTILITIES AND AMERICAN GOLD
NATURAL RESOURCES SECTOR ENERGY
ENERGY SERVICE
NATURAL GAS
PRECIOUS METALS AND MINERALS
UTILITIES GROWTH
FINANCIAL SERVICES SECTOR BROKERAGE AND INVESTMENT MANAGEMENT
FINANCIAL SERVICES
HOME FINANCE
INSURANCE
REGIONAL BANKS
HEALTH CARE SECTOR BIOTECHNOLOGY
HEALTH CARE
MEDICAL DELIVERY
TECHNOLOGY SECTOR COMPUTERS
DEFENSE AND AEROSPACE
DEVELOPING COMMUNICATIONS
ELECTRONICS
SOFTWARE AND COMPUTER SERVICES
TECHNOLOGY
TELECOMMUNICATIONS
MONEY MARKET
NOTES TO FINANCIAL STATEMENTS FOOTNOTES TO THE FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS THE AUDITOR'S OPINION
DISTRIBUTIONS
STATISTICAL ROUNDUP
FIDELITY SELECT PORTFOLIOS PROSPECTUS P-1
* FUND UPDATES FOR EACH SELECT PORTFOLIO INCLUDE: PERFORMANCE AND INVESTMENT SUMMARY, MANAGER'S OVERVIEW,
INVESTMENTS, AND FINANCIAL STATEMENTS.
</TABLE>
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE FUNDS. THIS REPORT IS
NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUNDS
UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. MUTUAL FUND
SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY
INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE BOARD
OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUNDS NOR FIDELITY DISTRIBUTORS
CORPORATION IS A BANK.
PERFORMANCE OVERVIEW
DEAR SHAREHOLDER:
The 12-month period ended February 28, 1995, was a relatively good year for
equity investors, considering that it was one of the worst ever for
fixed-income investors. The Standard & Poor's Composite Index of 500 Stocks
returned 7.36% during the period, including reinvested dividends. Overall,
15 of our 35 Select equity funds outperformed the S&P 500, with
considerable variation among the funds' returns. On balance, 22 of the 35
funds generated positive returns. On top was Health Care, which generated a
return of 31.24%, while at the bottom was American Gold, which produced a
loss of 18.62%.
Strong economic activity in the United States and rising prices for certain
commodities caused the Federal Reserve Board to raise short-term interest
rates six times over the past 12 months. Rising interest rates negatively
impacted funds such as Construction and Housing, and Brokerage and
Investment Management, which produced losses of 12.54% and 12.62%,
respectively. Rising commodity prices that resulted from the improving
economy, however, benefited Paper and Forest Products, and Chemicals, as
these funds generated returns of 14.91% and 9.90%, respectively.
Interestingly, as calendar 1994 progressed, the perception that prior
interest rate increases were having the desired effect of slowing economic
growth and relieving pressures on capital demands benefited the FINANCIAL
SERVICES sector. In addition, strong loan growth and adequate profit
margins, combined with merger activity, provided a favorable market
environment for this group. As a result, Financial Services, Home Finance,
Insurance, and Regional Banks all posted positive returns for the 12-month
period.
These same forces served to reduce perceived inflationary pressures and the
NATURAL RESOURCES sector suffered as a result. Precious Metals and
Minerals, and American Gold suffered losses for the year.
The TECHNOLOGY sector continued to benefit from the upswing in capital
spending geared toward enhancing corporate productivity. Higher shipments
of personal computers and cellular telephones resulted from falling prices
for these products. All of the funds in this sector posted positive returns
over the past year, with Developing Communications, Computers, and
Electronics leading the way.
As mentioned, two of the HEALTH CARE sector funds - Health Care and Medical
Delivery - achieved the highest returns for the 12 months. As the industry
has found it increasingly difficult to pass along rising costs to
consumers, companies have attempted to reconcile oversupply conditions
through merger and acquisition activity. As a result, health care companies
have enjoyed higher profitability levels due to improving operating
efficiencies that stem from these activities. Also, the lack of regulatory
actions under President Clinton's health care reform agenda lifted a major
cloud over the entire sector. All of these factors combined led to a
positive environment for this industry and mostly higher stock prices.
After a period of good performance in the first half of 1994, Select funds
which purchase CYCLICALS - those stocks that tend to rise and fall in step
with the economy - generally posted lackluster returns. Largely, this
stemmed from the market anticipating a slowdown in economic activity
resulting from the environment of higher interest rates. Such a slowdown
would result in lower profitability levels for the cyclical group. As a
result, Industrial Equipment, Air Transportation, and Automotive posted
losses for the year. The results, however, were not uniform as both
Industrial Materials and Transportation were able to post modest positive
returns.
Returns in the CONSUMER PRODUCTS sector were divergent. Food and
Agriculture - another fund that benefited from merger and acquisition
activity - posted a solid gain of 10.14% over the one-year period.
Retailing, however, suffered from an environment in which competition
forced retailers to discount prices heavily. And the corresponding negative
effects on retailers' earnings more than offset the positive effects of a
more robust economy. This environment is symptomatic of an oversupply
condition in the United States; there are simply too many stores competing
for consumers' dollars. Consumer Products, meanwhile, generated a modest
loss as companies in this sector found it increasingly difficult to exact
higher prices for their products to offset rising internal costs.
The ENERGY sector continued to turn in mixed results. Energy Service and
Energy generated positive returns while Natural Gas produced a loss. Oil
prices, though volatile, were largely flat during the year; however, the
price of natural gas was certainly lower. Hence, Energy Service and Energy
were able to adjust holdings to take advantage of oil fundamentals while
Natural Gas, given its objective, suffered due to poor natural gas
fundamentals.
Rising interest rates and increasing competition in the UTILITY sector
provided the backdrop for a hostile operating environment. Nevertheless,
Utilities Growth was able to post a small positive return by focusing on
telephone utilities over electric utilities.
The past 12 months have been a very interesting period for financial
investments, considering the very rapid rise in interest rates.
Surprisingly, the stock market performed remarkably well considering stocks
were fairly expensive relative to historical benchmarks. However, higher
yields have made fixed-income investments a more competitive alternative to
stocks over the past year. So Select investors should maintain reasonable
expectations in the months ahead.
What follows are detailed summaries of all the funds. We hope you find them
useful in evaluating your investments. As always, we thank you for your
continued interest in Fidelity Select Portfolios.
Sincerely,
Bart A. Grenier
Select Group Leader
CUMULATIVE TOTAL RETURNS*
FOR THE YEAR ENDED FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 31.24
Row: 2, Col: 1, Value: 19.63
Row: 3, Col: 1, Value: 14.91
Row: 4, Col: 1, Value: 13.63
Row: 5, Col: 1, Value: 13.51
Row: 6, Col: 1, Value: 12.43
Row: 7, Col: 1, Value: 12.05
Row: 8, Col: 1, Value: 10.14
Row: 9, Col: 1, Value: 9.9
Row: 10, Col: 1, Value: 9.789999999999999
Row: 11, Col: 1, Value: 9.350000000000001
Row: 12, Col: 1, Value: 7.98
Row: 13, Col: 1, Value: 7.79
Row: 14, Col: 1, Value: 7.649999999999999
Row: 15, Col: 1, Value: 7.6
Row: 16, Col: 1, Value: 7.359999999999999
Row: 17, Col: 1, Value: 5.9
Row: 18, Col: 1, Value: 4.72
Row: 19, Col: 1, Value: 4.609999999999999
Row: 20, Col: 1, Value: 4.13
Row: 21, Col: 1, Value: 1.97
Row: 22, Col: 1, Value: 0.21
Row: 23, Col: 1, Value: 0.04
Row: 24, Col: 1, Value: -1.07
Row: 25, Col: 1, Value: -1.93
Row: 26, Col: 1, Value: -4.01
Row: 27, Col: 1, Value: -4.59
Row: 28, Col: 1, Value: -5.06
Row: 29, Col: 1, Value: -6.859999999999999
Row: 30, Col: 1, Value: -8.370000000000001
Row: 31, Col: 1, Value: -12.45
Row: 32, Col: 1, Value: -12.54
Row: 33, Col: 1, Value: -12.59
Row: 34, Col: 1, Value: -12.62
Row: 35, Col: 1, Value: -13.91
Row: 36, Col: 1, Value: -18.62
Health Care 31.24%Medical Delivery 19.63%Paper and Forest Products
14.91%Developing Communications 13.63%Computers 13.51%Home Finance
12.43%Electronics 12.05%Food and Agriculture 10.14%Chemicals
9.90%Insurance 9.79%Multimedia 9.35%Telecommunications 7.98%Regional
Banks 7.79%Industrial Materials 7.65%Energy Service 7.60%S&P 500
7.36%Transportation 5.90%Financial Services 4.72%Technology 4.61%Defense
and Aerospace 4.13%Software and Computer Services 1.97%Utilities Growth
0.21%Energy 0.04%Leisure -1.07%Industrial Equipment -1.93%Retailing
- -4.01%Consumer Products -4.59%Natural Gas -5.06%Precious Metals and
Minerals -6.86%Biotechnology -8.37%Air Transportation
- -12.45%Construction and Housing -12.54%Automotive -12.59%Brokerage and
Investment Management -12.62%Environmental Services -13.91%American Gold
- -18.62%
CONSUMER PRODUCTS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total return would have
been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1995 YEAR FUND
CONSUMER PRODUCTS -4.59% 74.97%
CONSUMER PRODUCTS
(INCL. 3% SALES CHARGE) -7.45% 69.72%
S&P 500 7.36% 57.13%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year or since the fund started on
June 29, 1990. You can compare these figures to the performance of the S&P
500 - a common proxy for the U.S. stock market. This benchmark includes
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1995 YEAR FUND
CONSUMER PRODUCTS -4.59% 12.72%
CONSUMER PRODUCTS
(INCL. 3% SALES CHARGE) -7.45% 11.98%
S&P 500 7.36% 10.14%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Consumer Products (5Standard & Poor's 50
06/29/90 9700.00 10000.00
06/30/90 9700.00 10013.01
07/31/90 9670.90 9980.97
08/31/90 8943.40 9078.69
09/30/90 8439.00 8636.56
10/31/90 8749.40 8599.42
11/30/90 9234.40 9154.94
12/31/90 9593.72 9410.37
01/31/91 9808.43 9820.66
02/28/91 10569.68 10522.84
03/31/91 11077.18 10777.49
04/30/91 10950.30 10803.35
05/31/91 11477.32 11270.06
06/30/91 10911.27 10753.89
07/31/91 11623.72 11255.02
08/31/91 12101.94 11521.77
09/30/91 11994.59 11329.35
10/31/91 12375.21 11481.17
11/30/91 11857.95 11018.48
12/31/91 13290.06 12278.99
01/31/92 13379.45 12050.60
02/29/92 13836.36 12207.26
03/31/92 13677.44 11969.22
04/30/92 13717.17 12321.11
05/31/92 13627.77 12381.48
06/30/92 13015.68 12197.00
07/31/92 13388.15 12695.86
08/31/92 13253.65 12435.59
09/30/92 13377.80 12582.33
10/31/92 13595.08 12626.37
11/30/92 14246.90 13056.93
12/31/92 14427.77 13217.53
01/31/93 14331.66 13328.56
02/28/93 13851.09 13509.83
03/31/93 14662.72 13794.88
04/30/93 14566.61 13461.05
05/31/93 15719.97 13821.80
06/30/93 15730.65 13861.89
07/31/93 15880.16 13806.44
08/31/93 16916.06 14329.70
09/30/93 17289.84 14219.36
10/31/93 17823.80 14513.70
11/30/93 17428.67 14375.82
12/31/93 17987.72 14549.77
01/31/94 17835.98 15044.46
02/28/94 17789.29 14636.76
03/31/94 16645.36 13998.60
04/30/94 16823.06 14177.78
05/31/94 16600.01 14410.29
06/30/94 15684.31 14057.24
07/31/94 16106.94 14518.32
08/31/94 17046.12 15113.57
09/30/94 16729.14 14743.29
10/31/94 17057.86 15075.01
11/30/94 16224.33 14525.98
12/31/94 16716.10 14741.40
01/31/95 16569.68 15123.64
02/28/95 16972.33 15713.01
Let's say you invested $10,000 in Fidelity Select Consumer Products
Portfolio on June 29, 1990, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $16,972 -
a 69.72% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $15,713 over the same period - a 57.13% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
PepsiCo, Inc. 5.2
Philip Morris Companies, Inc. 5.2
Disney (Walt) Co. 4.9
Gillette Co. 4.5
Johnson & Johnson 4.4
Coca-Cola Company (The) 4.0
RJR Nabisco Holdings Corp. 3.9
Procter & Gamble Co. 3.8
Avon Products, Inc. 3.8
Alberto-Culver Co. Class A 3.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 59.2
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 5.5
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 9.199999999999999
Row: 1, Col: 6, Value: 14.4
Cosmetics 14.4%
Soft Drinks 9.2%
Drugs 6.2%
Cellular & Communication
Services 5.5%
Soaps & Detergents 5.5%
All Others 59.2%*
* INCLUDES SHORT-TERM INVESTMENTS
CONSUMER PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Mary English,
Portfolio Manager of Fidelity Select Consumer Products Portfolio
Q. HOW HAS THE FUND PERFORMED, MARY?
A. The fund's return of -4.59% for the year ended February 28, 1995,
trailed the S&P 500's return of 7.36% for the same period.
Q. WHY DIDN'T THE FUND PERFORM BETTER?
A. During the first half of the year, cyclical stocks - those that perform
well when the economy is strong - outperformed growth stocks. Technology,
in which the fund was underweighted, was also particularly strong. By the
second half, cyclicals began to lag and consumer non-durables began to look
more stable. These defensive stocks are more attractive, especially if
interest rates rise. While this was good for the fund, in hindsight I wish
the fund was more heavily weighted in non-durables such as Kimberly Clark
and General Mills. Despite technology stock as a group being strong, the
fund was hurt when specific holdings such as Nokia, a Finnish cellular
phone manufacturer, and Compaq, a personal computer manufacturer, fell
early in 1995.
Q. WHAT HAPPENED TO THOSE STOCKS?
A. Nokia is a Finnish cellular telephone company with strong earnings
growth. The stock suffered when Motorola, one of its leading competitors,
announced it had an excess supply of cellular phones. This drove down the
stock price for all competitors. Compaq, a well-run personal computer
manufacturer, lost more than 20% of its value early in the year when the
company released earnings that were good, but slightly below Wall Street's
expectations. These two stories are good examples of why I didn't have more
technology exposure in the fund; I don't like the volatility that may go
along with them.
Q. YOU'VE MADE A LOT OF CHANGES TO THE FUND'S TOP 10 HOLDINGS IN THE PAST
SIX MONTHS. WHAT WAS YOUR STRATEGY?
A. The fund was heavily weighted in basic consumer goods; typically
recession-resistant, defensive stocks that have good growth prospects. I
especially favor those with a strong global presence. Although nobody knows
what the economy will do next, I think the top stocks in the fund should
fare well in a recession, and are good values if economic factors remain
unchanged. For example, PepsiCo is new to the fund, and was its largest
holding at the end of February. Pepsi is a food company as well as a
beverage company; and people still eat and drink regardless of what the
economy is doing. I also like the tobacco companies such as Philip Morris
and RJR Nabisco, which are both inexpensive and have been excellent cash
flow generators.
Q. WHAT OTHER STOCKS DO YOU LIKE?
A. I've increased the fund's holding in Disney. The company's feature
releases and subsequent video sales have been strong and it's been a great
investment for the fund. I also like companies that sell basic products and
are able to raise prices while maintaining earnings growth. Gillette is a
good example. The company is unusual because it's been able to raise prices
every year, even during a period of non-inflation. Finally, Tambrands is
another favorite with an extraordinarily strong brand name.
Q. THE FUND HAS A BROAD UNIVERSE OF STOCKS IN WHICH TO INVEST. WHAT SECTORS
ARE YOU STAYING AWAY FROM?
A. I've cut the number of the fund's holdings from about 80 stocks to about
50 because I think the fund can benefit from a more narrow focus. I've
stayed away from industries in which I perceive a deterioration in business
prospects, such as airlines. I also think the auto cycle has peaked, so I'm
staying away from auto-related stocks. Retail, with few exceptions, does
not excite me. In addition, I'm convinced that the current interest rate
environment is a negative for industries that have anything to do with the
home such as appliances, furniture and carpet.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I think there will continue to be a significant degree of uncertainty in
the market, and the economy in general. Uncertainty, however, is good for
basic, consumer stocks in which the fund has invested. I'll probably
maintain the fund's defensive strategy and continue to reduce the number of
stocks that the fund holds. However, I may add some entertainment and
apparel stocks if their valuations - prices relative to earnings - become
more attractive.
FUND FACTS
START DATE: June 29, 1990
SIZE: as of February 28, 1995, more than
$20 million
MANAGER: Mary English, since February 1994;
manager, Fidelity Select Retailing Portfolio,
1993-1994; equity analyst, specialty retail and
advertising industries, 1991-1993; joined
Fidelity in 1991
(checkmark)
CONSUMER PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 96.3%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.4%
ADVERTISING AGENCIES - 0.4%
Saatchi & Saatchi Co. sponsored ADR (a) 20,000 $ 90,000 78514340
AIR TRANSPORTATION - 3.2%
AIR TRANSPORTATION, REGIONAL - 3.2%
Pittston Company Services Group 27,000 675,000 72570110
AUTOS, TIRES, & ACCESSORIES - 2.0%
AUTO & TRUCK PARTS - 2.0%
Echlin, Inc. 12,000 415,500 27874910
BEVERAGES - 10.3%
MALT BEVERAGE - 1.1%
Anheuser-Busch Companies, Inc. 4,000 225,500 03522910
SOFT DRINKS - 9.2%
Coca-Cola Company (The) 15,000 825,000 19121610
PepsiCo, Inc. 28,000 1,095,500 71344810
1,920,500
TOTAL BEVERAGES 2,146,000
BROADCASTING - 1.9%
CABLE TV OPERATORS - 1.9%
Viacom, Inc. Class A (a) 8,600 397,750 92552410
CELLULAR - 5.5%
CELLULAR & COMMUNICATION SERVICES - 5.5%
Airtouch Communications (a) 24,000 654,000 00949T10
BCE Mobile Communications, Inc. (a) 12,100 406,004 05534G10
Vodafone Group PLC sponsored ADR 3,000 91,500 92857T10
TOTAL CELLULAR 1,151,504
COMMUNICATIONS EQUIPMENT - 1.8%
DATACOMMUNICATIONS EQUIPMENT - 0.2%
ITI Technologies (a) 2,000 49,500 45056410
TELEPHONE EQUIPMENT - 0.9%
DSC Communications Corp. (a) 5,000 180,000 23331110
TELEPHONE INTERCONNECT SYSTEMS - 0.7%
General Instrument Corp. (a) 4,500 142,875 37012110
TOTAL COMMUNICATIONS EQUIPMENT 372,375
COMPUTER SERVICES & SOFTWARE - 1.1%
COMPUTER RELATED SERVICES - 0.0%
TGV Software (a) 200 3,200 87242310
COMPUTER SERVICES - 0.4%
America Online, Inc. (a) 1,000 71,000 02364J10
PREPACKAGED COMPUTER SOFTWARE - 0.7%
Intuit (a) 2,000 132,500 46120210
Softkey International, Inc. (a) 800 20,400 83402N10
152,900
TOTAL COMPUTER SERVICES & SOFTWARE 227,100
COMPUTERS & OFFICE EQUIPMENT - 2.1%
MINI & MICRO COMPUTERS - 2.1%
Compaq Computer Corp. (a) 13,000 448,500 20449310
CONGLOMERATES - 0.3%
Dial Corp. (The) 2,600 65,000 25247010
CONSUMER ELECTRONICS - 1.3%
APPLIANCES - 1.3%
Black & Decker Corp. 10,000 267,500 09179710
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 6.2%
DRUGS - 6.2%
Pfizer, Inc. 7,000 $ 579,250 71708110
Schering-Plough Corp. 9,000 705,375 80660510
TOTAL DRUGS & PHARMACEUTICALS 1,284,625
ELECTRICAL EQUIPMENT - 0.9%
ALARMS & SIGNAL DEVICES - 0.9%
Pittway Corp. (Del.) Class A 2,000 90,000 72579020
Sensormatic Electronics Corp. 3,600 102,150 81726510
TOTAL ELECTRICAL EQUIPMENT 192,150
ELECTRONIC INSTRUMENTS - 1.7%
INDUSTRY MEASUREMENT INSTRUMENTS - 1.7%
American Sensors, Inc. (a) 34,000 361,250 02957910
ENTERTAINMENT - 4.9%
MOTION PICTURE PRODUCTION - 4.9%
Disney (Walt) Co. 19,000 1,014,125 25468710
FOODS - 0.9%
COOKIES & CRACKERS - 0.9%
Nabisco Holdings Class A 7,000 194,250 62952610
GENERAL MERCHANDISE STORES - 0.6%
Wal-Mart Stores, Inc. 5,000 118,750 93114210
GROCERY STORES - 0.2%
GROCERY - RETAIL - 0.2%
Stop & Shop Companies, Inc. (a) 2,000 48,500 86209910
HOUSEHOLD PRODUCTS - 23.0%
COSMETICS - 14.4%
Alberto-Culver Co. Class A 29,000 721,375 01306820
Avon Products, Inc. 14,000 787,500 05430310
Gillette Co. 12,000 949,500 37576610
Helene Curtis Industries, Inc. 14,000 406,000 42323610
Tambrands, Inc. 3,000 129,750 87508010
2,994,125
FABRICATED RUBBER PRODUCTS - 0.7%
Premark International, Inc. 3,500 151,375 74045910
MANUFACTURED PRODUCTS - 2.4%
Luxottica Group Spa sponsored ADR 13,000 505,375 55068R20
SOAPS & DETERGENTS - 5.5%
Guest Supply, Inc. (a) 10,000 182,500 40163010
Procter & Gamble Co. 12,000 798,000 74271810
Rubbermaid, Inc. 5,000 158,125 78108810
1,138,625
TOTAL HOUSEHOLD PRODUCTS 4,789,500
LEISURE DURABLES & TOYS - 0.9%
SPORTING & ATHLETIC GOODS - 0.6%
Cobra Golf, Inc. (a) 3,600 117,225 19090710
TOYS & GAMES - 0.3%
Mattel, Inc. 3,000 67,125 57708110
TOTAL LEISURE DURABLES & TOYS 184,350
LODGING & GAMING - 1.7%
HOTELS, MOTELS, & TOURIST COURTS - 1.7%
Host Marriott Corp. (a) 16,000 176,000 44107810
Promus Companies, Inc. (a) 5,000 178,750 74342A10
TOTAL LODGING & GAMING 354,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 4.4%
MEDICAL SUPPLIES & APPLIANCES - 4.4%
Johnson & Johnson 16,000 $ 908,000 47816010
SERVICES - 11.9%
BUILDING MAINTENANCE - 0.6%
ADT Ltd. (a) 11,000 126,500 00091530
BUSINESS SERVICES - 2.6%
Franklin Quest Co. (a) 15,000 534,375 35459610
COMMERCIAL, ECONOMIC, SOCIOLOGICAL,
& EDUCATIONAL RESEARCH - 1.0%
Gartner Group, Inc. Class A (a) 5,000 207,500 36665110
CREDIT REPORTING AGENCIES - 0.3%
First Financial Management Corp. 1,000 69,125 32024510
GENERAL SERVICES - 0.5%
Children's Discovery Centers of
America, Inc. (a) 7,000 107,625 16875720
PERSONAL SERVICES - 1.8%
Block (H & R), Inc. 10,000 376,250 09367110
PERSONNEL SUPPLY SERVICES - 5.1%
Adia SA (BR) (a) 500 92,892 00699793
CDI Corp. (a) 8,000 176,000 12507110
Career Horizons, Inc. (a) 10,000 192,500 14167210
Manpower, Inc. 2,000 58,500 56418H10
Norrell Corp. GA 27,000 533,250 65630110
1,053,142
TOTAL SERVICES 2,474,517
TOBACCO - 9.1%
CIGARETTES - 3.9%
RJR Nabisco Holdings Corp. 146,000 821,250 74960K10
TOBACCO MANUFACTURERS - 5.2%
Philip Morris Companies, Inc. 18,000 1,093,500 71815410
TOTAL TOBACCO 1,914,750
TOTAL COMMON STOCKS
(Cost $19,800,458) 20,095,746
REPURCHASE AGREEMENTS - 3.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 6.08%
dated 2/28/95 due 3/1/95 $ 774,131 774,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $20,574,458) $ 20,869,746
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $28,154,852 and $15,065,584, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $14,756 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $20,586,329. Net unrealized appreciation aggregated
$283,417 of which $762,046 related to appreciated investment securities
and $478,629 related to depreciated investment securities.
CONSUMER PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $774,000) (cost $20,574,458) - See $ 20,869,746
accompanying schedule
Cash 318
Receivable for investments sold 296,936
Receivable for fund shares sold 93,861
Dividends receivable 10,895
Redemption fees receivable 148
TOTAL ASSETS 21,271,904
LIABILITIES
Payable for investments purchased $ 672,914
Payable for fund shares redeemed 61,288
Accrued management fee 7,738
Other payables and 28,658
accrued expenses
TOTAL LIABILITIES 770,598
NET ASSETS $ 20,501,306
Net Assets consist of:
Paid in capital $ 20,136,706
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 69,312
Net unrealized appreciation (depreciation) on investments 295,288
NET ASSETS, for 1,474,086 $ 20,501,306
shares outstanding
NET ASSET VALUE and redemption price per share ($20,501,306 (divided by) 1,474,086 shares) $13.91
Maximum offering price per share (100/97.00 of $13.91) $14.34
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 78,196
Dividends
Interest 33,699
TOTAL INCOME 111,895
EXPENSES
Management fee $ 49,334
Transfer agent 85,795
Fees
Redemption fees (6,173
)
Accounting fees and expenses 45,039
Non-interested trustees' compensation 110
Custodian fees and expenses 14,974
Registration fees 13,528
Audit 19,244
Legal 142
Reports to shareholders 798
Miscellaneous 52
Total expenses before reductions 222,843
Expense reductions (25,822 197,021
)
NET INVESTMENT INCOME (LOSS) (85,126
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 323,209
Foreign currency transactions (2 323,207
)
Change in net unrealized appreciation (depreciation) on investment securities (648,664
)
NET GAIN (LOSS) (325,457
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (410,583
)
OTHER INFORMATION $28,529
Sales Charges Paid to FDC
Deferred sales charges $1,621
withheld by FDC
Exchange fees withheld by FSC $4,928
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (85,126 $ (120,101
Net investment income (loss) ) )
Net realized gain (loss) 323,207 1,327,222
Change in net unrealized appreciation (depreciation) (648,664 607,019
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (410,583 1,814,140
)
Distributions to shareholders from net realized gains (290,362 (829,580
) )
Share transactions 18,706,244 15,679,102
Net proceeds from sales of shares
Reinvestment of distributions 284,767 814,217
Cost of shares redeemed (6,171,937 (16,130,050
) )
Paid in capital portion of redemption fees 9,205 20,663
Net increase (decrease) in net assets resulting from share transactions 12,828,279 383,932
TOTAL INCREASE (DECREASE) IN NET ASSETS 12,127,334 1,368,492
NET ASSETS
Beginning of period 8,373,972 7,005,480
End of period (including undistributed net investment income of $0 and $70, respectively) $ 20,501,306 $ 8,373,972
OTHER INFORMATION
Shares
Sold 1,341,627 1,044,542
Issued in reinvestment of distributions 21,383 54,101
Redeemed (438,536 (1,089,262
) )
Net increase (decrease) 924,474 9,381
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEAR JUNE 29, 1990
FEBRUARY 28, ENDED ENDED (COMMENCEMEN
FEBRUARY 28, APRIL 30, T OF OPERATIONS)
TO APRIL 30,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.24 $ 12.97 $ 13.81 $ 11.22 $ 10.00
Income from Investment Operations
Net investment income (loss) (.15) (.20) (.09) (.07) .05 E
Net realized and unrealized gain (loss) (.60) 3.84 .20 2.86 1.18
Total from investment operations (.75) 3.64 .11 2.79 1.23
Less Distributions - - - - (.06)
From net investment income
From net realized gain (.60) (1.40) (.97) (.22) -
Total distributions (.60) (1.40) (.97) (.22) (.06)
Redemption fees added to paid in capital .02 .03 .02 .02 .05
Net asset value, end of period $ 13.91 $ 15.24 $ 12.97 $ 13.81 $ 11.22
TOTAL RETURN B, C (4.59)% 28.43% .98% 25.27% 12.89%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 20,501 $ 8,374 $ 7,005 $ 7,553 $ 1,877
Ratio of expenses to average net assets 2.49% 2.48% 2.47% A 2.48% 2.43% A
Ratio of expenses to average net assets before expense reductions 2.82% 2.62% 3.17% A 2.83% 3.11% A
Ratio of net investment income (loss) to average net assets (1.08)% (1.34)% (.80)% (.56)% .62% A
A
Portfolio turnover rate 190% 169% 215% A 140% 108% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
FOOD AND AGRICULTURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
FOOD AND AGRICULTURE 10.14% 102.13% 409.09%
FOOD AND AGRICULTURE
(INCL. 3% SALES CHARGE) 6.83% 96.07% 393.82%
S&P 500 7.36% 71.20% 246.77%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on July 29, 1985. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
FOOD AND AGRICULTURE 10.14% 15.11% 18.48%
FOOD AND AGRICULTURE
(INCL. 3% SALES CHARGE) 6.83% 14.41% 18.11%
S&P 500 7.36% 11.35% 13.84%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Food & AgricuStandard & Poor's 50
07/29/85 9700.00 10000.00
07/31/85 9583.60 9926.31
08/31/85 9651.50 9841.93
09/30/85 9467.20 9533.88
10/31/85 10194.70 9974.35
11/30/85 10864.00 10658.59
12/31/85 11164.70 11174.46
01/31/86 11116.20 11237.04
02/28/86 12328.70 12077.57
03/31/86 13143.50 12751.50
04/30/86 13628.50 12607.41
05/31/86 14152.30 13278.12
06/30/86 14947.70 13502.52
07/31/86 14103.80 12747.73
08/31/86 14782.80 13693.61
09/30/86 13589.70 12561.15
10/31/86 13890.40 13285.93
11/30/86 14055.30 13608.78
12/31/86 13677.00 13261.75
01/31/87 15345.40 15048.11
02/28/87 16538.50 15642.51
03/31/87 17042.90 16094.58
04/30/87 16984.70 15951.34
05/31/87 16878.00 16090.11
06/30/87 17857.70 16902.66
07/31/87 18507.60 17759.63
08/31/87 19157.50 18422.06
09/30/87 18963.50 18018.62
10/31/87 14685.80 14137.41
11/30/87 14035.90 12972.49
12/31/87 14704.52 13959.69
01/31/88 15279.79 14547.40
02/29/88 16036.71 15225.31
03/31/88 16147.73 14754.84
04/30/88 16198.19 14918.62
05/31/88 16319.30 15048.41
06/30/88 16985.39 15739.14
07/31/88 17106.50 15679.33
08/31/88 17096.41 15146.23
09/30/88 17782.69 15791.46
10/31/88 18610.26 16230.46
11/30/88 18176.29 15998.37
12/31/88 18641.57 16278.34
01/31/89 19603.00 17469.91
02/28/89 19248.79 17034.91
03/31/89 19977.45 17431.83
04/30/89 21009.72 18336.54
05/31/89 22305.12 19079.17
06/30/89 22743.39 18970.42
07/31/89 24912.89 20683.44
08/31/89 24528.81 21088.84
09/30/89 24632.62 21002.38
10/31/89 24383.49 20515.12
11/30/89 25307.34 20933.63
12/31/89 25887.07 21436.04
01/31/90 24086.42 19997.68
02/28/90 24430.99 20255.65
03/31/90 25486.92 20792.42
04/30/90 25386.89 20272.61
05/31/90 27598.79 22249.19
06/30/90 28494.04 22097.90
07/31/90 28482.81 22027.18
08/31/90 26405.00 20035.93
09/30/90 25562.64 19060.18
10/31/90 26169.14 18978.22
11/30/90 27247.35 20204.21
12/31/90 28301.55 20767.91
01/31/91 29113.81 21673.39
02/28/91 31306.92 23223.04
03/31/91 32838.61 23785.03
04/30/91 32339.65 23842.12
05/31/91 33523.23 24872.10
06/30/91 32142.06 23732.96
07/31/91 33487.21 24838.91
08/31/91 34820.56 25427.59
09/30/91 34206.98 25002.95
10/31/91 34218.78 25337.99
11/30/91 33982.79 24316.87
12/31/91 37949.47 27098.72
01/31/92 37383.79 26594.68
02/29/92 37174.74 26940.42
03/31/92 36350.82 26415.08
04/30/92 35932.71 27191.68
05/31/92 36252.44 27324.92
06/30/92 35856.08 26917.78
07/31/92 37241.02 28018.72
08/31/92 37075.85 27444.33
09/30/92 37698.43 27768.18
10/31/92 38105.02 27865.36
11/30/92 39566.20 28815.57
12/31/92 40236.31 29170.00
01/31/93 40249.32 29415.03
02/28/93 40145.25 29815.08
03/31/93 41237.99 30444.17
04/30/93 39636.78 29707.43
05/31/93 40884.76 30503.58
06/30/93 40477.81 30592.05
07/31/93 39975.91 30469.68
08/31/93 41888.57 31624.48
09/30/93 41752.92 31380.97
10/31/93 43326.45 32030.56
11/30/93 42824.55 31726.27
12/31/93 43784.13 32110.15
01/31/94 45108.33 33201.90
02/28/94 44837.79 32302.13
03/31/94 42744.70 30893.75
04/30/94 42267.09 31289.19
05/31/94 41959.96 31802.34
06/30/94 42281.71 31023.18
07/31/94 43700.37 32040.74
08/31/94 46479.17 33354.41
09/30/94 46566.92 32537.23
10/31/94 47444.44 33269.31
11/30/94 46289.04 32057.65
12/31/94 46452.33 32533.06
01/31/95 48410.61 33376.64
02/28/95 49382.17 34677.33
Let's say you invested $10,000 in Fidelity Select Food and Agriculture
Portfolio on July 29, 1985, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $49,382 -
a 393.82% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $34,677 over the same period - a 246.77% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Philip Morris Companies, Inc. 8.5
Ralston Purina Co. 8.3
PepsiCo, Inc. 7.2
RalCorp Holdings, Inc. 4.7
Tyson Foods, Inc. 4.4
RJR Nabisco Holdings Corp. 4.3
IBP, Inc. 3.3
Anheuser-Busch Companies, Inc. 2.8
CPC International, Inc. 2.3
Dr. Pepper/Seven-Up Companies, Inc. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 48.1
Row: 1, Col: 2, Value: 8.9
Row: 1, Col: 3, Value: 9.300000000000001
Row: 1, Col: 4, Value: 10.1
Row: 1, Col: 5, Value: 11.4
Row: 1, Col: 6, Value: 12.2
Meat & Fish 12.2%
Soft Drinks 11.4%
Grain Mill Products 10.1%
Tobacco Manufacturers 9.3%
Food 8.9%
All Others 48.1%*
* INCLUDES SHORT-TERM INVESTMENTS
FOOD AND AGRICULTURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
William Mankivsky,
Portfolio Manager of Fidelity Select Food and Agriculture Portfolio
Q. BILL, HOW HAS THE FUND PERFORMED?
A. Very well. For the 12 months ended February 28, 1995, the fund had a
total return of 10.14%, beating the S&P 500, which returned 7.36% during
the same period.
Q. WHAT HELPED THE FUND OUTPERFORM THE S&P 500?
A. It came down to individual stock selection. A number of the companies
the fund has owned for some time have helped its performance over the past
year. Some of these investments performed well because of improving
business prospects or important strategic moves. Some added value because
they were acquired by other companies that paid a higher price per share
than the fund paid for them.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Sure. I'll start with Ralston Purina. I found the stock's price to be
inexpensive on a relative basis. The company has two basic businesses: pet
foods and Energizer batteries. The pet food business has enjoyed good cash
flow, which enabled the company to pay down debt or buy back stock.
Energizer is second only to Duracell in market share, and was trading at a
much lower implied value - how much the company probably would trade for
if it stood alone - than its competitor and I believe was worth more than
the market indicated. Furthermore, in the past, Ralston Purina's management
has tried to unlock value by splitting off pieces of its business and
letting them trade on their own. That's what happened about a year ago with
RalCorp.
Q. WHICH WAS ALSO ONE OF THE FUND'S TOP INVESTMENTS AT THE END OF THE
PERIOD . . .
A. Yes. This stock also helped the fund. All of its businesses have been
doing well. The cereal division benefited from a better pricing
environment. The cookie and cracker division lost money last year, but
appears to be on track, which would provide a significant swing in the
company's operating profits. The baby food business did well. In addition,
the company owns three ski areas and some real estate which I expect it
will sell. If the company does so, it would reduce its debt.
Q. WHAT ARE SOME EXAMPLES OF ACQUISITION STORIES THAT BENEFITED THE FUND?
A. Pet was one. I felt that as long as the company continued to increase
earnings and expand distribution of its two core food lines - Old El Paso
Mexican Foods and Progresso soups - that it could remain independent.
However, I also saw the company as an attractive takeover candidate,
because it had high profit margins and market share. When the company
reported a poor September quarter, the stock decreased in price and I
started buying more shares. In January, Grand Metropolitan, a large British
distilling and food company, acquired Pet at a price that gave the fund
close to a 50% return. The fund also profited when Cadbury Schweppes, which
already owned about 25% of Dr. Pepper/Seven-Up, decided to acquire the soft
drink company completely.
Q. WHAT STOCKS HAVE TURNED IN DISAPPOINTING PERFORMANCES?
A. RJR Nabisco is one. That stock lagged because the company's majority
shareholder - Kohlberg Kravis Roberts - sold a significant portion of its
RJR investment in order to finance its acquisition of Borden, causing the
market to be flooded temporarily with RJR stock. However, while the stock
price performance has been disappointing, I believe the overall operating
performance of the company is healthy, and I find the stock inexpensive at
this point in time. Another disappointing stock, Dean Foods, acquired Birds
Eye in late 1993, which I thought was the beginning of acquisition activity
that might bring the company higher earnings and bolster its stock price.
But nothing has materialized, so the stock has treaded water for much of
the year. Finally, the banana stocks - such as Dole and Chiquita - have
been hurt by price wars in Japan and a cut in European demand due to import
restrictions, as well as other problems particular to each company.
Q. WHAT KIND OF STOCKS WILL YOU BE LOOKING FOR GOING FORWARD?
A. Many of the brand-name companies, especially in the cereal and
carbonated soft drink businesses, have been changing the way they are
approaching the market through what's called efficient consumer response.
This process involves trying to reduce inventories throughout the supply
chain, hoping to achieve a more efficient product flow. This, in turn,
should lead to fresher, lower-priced products that would still maintain or
increase profits per unit sold. To a certain extent, looking at companies
taking positive steps in the way they go to market will be one of my
investment focuses going forward. I'll look to find companies that seem to
be restructuring successfully in this manner, but whose stocks are
inexpensive because they are not yet perceived to be doing so. If the
market comes around to such stories, stock prices can really expand.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1995, more than
$197 million
MANAGER: William Mankivsky, since 1993;
manager, Fidelity Select Energy Service
Portfolio, 1991-1994; joined Fidelity in 1991
(checkmark)
FOOD AND AGRICULTURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 78.0%
SHARES VALUE (NOTE 1)
AGRICULTURE - 2.8%
CROPS - 2.8%
DEKALB Genetics Corp. Class B 140,900 $ 4,024,451 24487820
Pioneer Hi-Bred International, Inc. 68,700 2,318,625 72368610
6,343,076
BEVERAGES - 16.1%
DISTILLED BEVERAGES - 1.4%
Canadaigua Wine Co. Class A (a) 19,400 719,013 13721920
Seagram Co. Ltd. 80,600 2,486,938 81185010
3,205,951
MALT BEVERAGE - 3.3%
Anheuser-Busch Companies, Inc. 116,000 6,539,500 03522910
Coors (Adolph) Co. Class B 8,900 144,625 21701610
Fomento Economico Mexicano SA
de CV Class B 41,000 61,723 34441892
Greenalls Group PLC 35,000 223,212 39499193
Guinness PLC Ord. 33,000 216,985 40203310
Quilmes Industries SA 29,000 495,900 74899692
7,681,945
SOFT DRINKS - 11.4%
Cadbury-Schweppes PLC Ord. 78,400 525,428 12720910
Celestial Seasonings, Inc. (a) 25,700 449,750 15101610
Coca-Cola Company (The) 34,000 1,870,000 19121610
Dr. Pepper/Seven-Up Companies,
Inc. (a) 150,000 4,931,250 25613130
Panamerican Beverages, Inc. Class A 61,600 1,501,500 69829W10
PepsiCo, Inc. 425,000 16,628,125 71344810
Serm Suk Co. Ltd. 40,000 445,870 81799999
26,351,923
TOTAL BEVERAGES 37,239,819
CHEMICALS & PLASTICS - 0.3%
AGRICULTURAL CHEMICALS - 0.3%
Potash Corp. of Saskatchewan 18,000 650,930 73755L10
CONGLOMERATES - 0.2%
Whitman Corp. 25,000 471,875 96647K10
FOODS - 42.1%
BAKERY PRODUCTS - 0.2%
Interstate Bakeries Corp. (Del.) 8,000 122,000 46072H10
Grupo Industries Bimbo SA de CV
Series A Ord. 62,200 239,311 60899995
361,311
CANDY - 1.0%
Hershey Foods Corp. 47,000 2,303,000 42786610
CEREAL BREAKFAST FOODS - 4.7%
RalCorp Holdings, Inc. (a) 431,366 10,891,992 75102510
COOKIES & CRACKERS - 0.2%
Nabisco Holdings Class A 20,000 555,000 62952610
DAIRY - 1.7%
Dean Foods Co. 123,400 3,825,400 24236110
FOOD - 8.9%
Chiquita Brands International, Inc. 234,500 3,136,438 17003210
Dole Food, Inc. 165,500 4,303,000 25660510
General Mills, Inc. 62,000 3,758,750 37033410
Grand Metropolitan PLC 240,000 1,452,734 38559099
Hazlewood Foods Ord. 95,000 154,848 42199292
Hillsdown Holdings PLC 47,990 134,801 43258610
Kellogg Co. 91,000 4,925,375 48783610
Nestle SA (Reg.) 2,380 2,295,412 64106992
SHARES VALUE (NOTE 1)
Perkins Foods PLC 290,000 $ 289,124 71499492
Sylvan Foods Holdings, Inc. (a) 14,900 172,281 87137110
20,622,763
GENERAL FOOD PREPARATIONS - 2.5%
CPC International, Inc. 100,000 5,350,000 12614910
Herdez SA de CV Class B 458,846 156,925 42799F23
McCormick & Co., Inc. (non-vtg) 16,000 354,000 57978020
5,860,925
GRAIN MILL PRODUCTS - 10.1%
Archer-Daniels-Midland Co. 220,236 4,184,484 03948310
Ralston Purina Co. 399,900 19,095,225 75127730
23,279,709
MEAT & FISH - 12.2%
ConAgra, Inc. 43,900 1,437,725 20588710
GoodMark Foods, Inc. 265,500 4,065,469 38238710
Hormel (George A) & Co. 177,400 4,745,450 44045210
IBP, Inc. 241,300 7,691,438 44922310
Smithfield Foods, Inc. (a) 5,400 142,763 83224810
Tyson Foods, Inc. 413,600 10,184,900 90249410
28,267,745
SUGAR & CANDIES - 0.6%
Tate & Lyle PLC 27,574 190,252 87657010
Tootsie Roll Industries, Inc. 16,152 1,082,184 89051610
1,272,436
TOTAL FOODS 97,240,281
INDUSTRIAL MACHINERY & EQUIPMENT - 0.8%
FARM MACHINERY & EQUIPMENT - 0.8%
Case Corp. 23,000 537,625 14743R10
Deere & Co. 16,000 1,226,000 24419910
1,763,625
RESTAURANTS - 2.1%
McDonald's Corp. 143,000 4,754,750 58013510
TOBACCO - 13.6%
CIGARETTES - 4.3%
RJR Nabisco Holdings Corp. 1,756,100 9,878,063 74960K10
TOBACCO MANUFACTURERS - 9.3%
Philip Morris Companies, Inc. (a) 324,000 19,683,000 71815410
UST, Inc. 63,000 1,874,250 90291110
21,557,250
TOTAL TOBACCO 31,435,313
TOTAL COMMON STOCKS
(Cost $170,034,845) $ 179,899,669
REPURCHASE AGREEMENTS - 22.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 (Note 3) $ 50,886,593 50,878,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $220,912,845) $ 230,777,669
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $191,430,266 and $110,114,061, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $168,049 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,357,000 and $3,207,500,
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $221,090,390. Net unrealized appreciation
aggregated $9,687,279, of which $12,917,817 related to appreciated
investment securities and $3,230,538 related to depreciated investment
securities.
The fund hereby designates $1,628,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FOOD AND AGRICULTURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $50,878,000) (cost $220,912,845) - See $ 230,777,669
accompanying schedule
Cash 50
Receivable for investments sold 5,237,207
Receivable for fund shares sold 1,958,911
Dividends receivable 250,683
Redemption fees receivable 652
TOTAL ASSETS 238,225,172
LIABILITIES
Payable for investments purchased $ 38,171,200
Payable for fund shares redeemed 2,702,931
Accrued management fee 86,249
Other payables and accrued expenses 134,802
TOTAL LIABILITIES 41,095,182
NET ASSETS $ 197,129,990
Net Assets consist of:
Paid in capital $ 182,538,002
Undistributed net investment income 245,442
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 4,481,688
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 9,864,858
NET ASSETS, for 6,059,183 shares outstanding $ 197,129,990
NET ASSET VALUE and redemption price per share ($197,129,990 (divided by) 6,059,183 shares) $32.53
Maximum offering price per share (100/97.00 of $32.53) $33.54
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 1,488,260
Dividends
Interest 525,937
TOTAL INCOME 2,014,197
EXPENSES
Management fee $ 577,884
Transfer agent 835,915
Fees
Redemption fees (41,414
)
Accounting fees and expenses 93,455
Non-interested trustees' compensation 1,657
Custodian fees and expenses 21,727
Registration fees 43,628
Audit 30,959
Legal 2,294
Interest 1,505
Reports to shareholders 7,516
Miscellaneous 856
Total expenses before reductions 1,575,982
Expense reductions (18,731 1,557,251
)
NET INVESTMENT INCOME 456,946
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 7,639,160
Foreign currency transactions 1,863 7,641,023
Change in net unrealized appreciation (depreciation) on:
Investment securities 1,271,937
Assets and liabilities in foreign currencies 34 1,271,971
NET GAIN (LOSS) 8,912,994
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 9,369,940
OTHER INFORMATION $288,346
Sales Charges Paid to FDC
Deferred sales charges withheld $6,662
by FDC
Exchange fees withheld by FSC $27,060
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 456,946 $ 314,450
Net investment income
Net realized gain (loss) 7,641,023 12,506,767
Change in net unrealized appreciation (depreciation) 1,271,971 (1,004,065
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 9,369,940 11,817,152
Distributions to shareholders: (213,103 (310,254
From net investment income ) )
From net realized gain (5,012,131 (12,323,186
) )
TOTAL DISTRIBUTIONS (5,225,234 (12,633,440
) )
Share transactions 177,269,912 124,680,275
Net proceeds from sales of shares
Reinvestment of distributions 5,111,970 12,440,857
Cost of shares redeemed (84,479,607 (149,706,361
) )
Redemption fees 72,669 34,844
Net increase (decrease) in net assets resulting from share transactions 97,974,944 (12,550,385
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 102,119,650 (13,366,673
)
NET ASSETS
Beginning of period 95,010,340 108,377,013
End of period (including undistributed net investment income of $245,442 and $946, respectively) $ 197,129,990 $ 95,010,340
OTHER INFORMATION
Shares
Sold 5,597,630 3,975,362
Issued in reinvestment of distributions 172,511 414,802
Redeemed (2,728,534 (4,884,544
) )
Net increase (decrease) 3,041,607 (494,380
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 31.49 $ 30.86 $ 29.22 $ 27.87 $ 22.84
Income from Investment Operations
Net investment income .15 .09 .05 .13 .21
Net realized and unrealized gain (loss) 2.80 3.29 3.26 2.89 5.78
Total from investment operations 2.95 3.38 3.31 3.02 5.99
Less Distributions (.08) (.06) (.10) (.11) (.27)
From net investment income
From net realized gain (1.85) (2.70) (1.57) (1.59) (.79)
Total distributions (1.93) (2.76) (1.67) (1.70) (1.06)
Redemption fees added to paid in capital .02 .01 - .03 .10
Net asset value, end of period $ 32.53 $ 31.49 $ 30.86 $ 29.22 $ 27.87
TOTAL RETURN B, C 10.14% 11.69% 11.72% 11.11% 27.39%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 197,130 $ 95,010 $ 108,377 $ 108,922 $ 64,490
Ratio of expenses to average net assets 1.68% 1.64% 1.67% A 1.83% 2.22%
Ratio of expenses to average net assets before expense reductions 1.70% 1.65% 1.67% A 1.83% 2.22%
Ratio of net investment income to average net assets .49% .29% .21% A .46% .85%
Portfolio turnover rate 126% 96% 515% A 63% 124%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
LEISURE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
LEISURE -1.07% 90.68% 339.01%
LEISURE
(INCL. 3% SALES CHARGE) -4.04% 84.96% 325.84%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or 10 years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
LEISURE -1.07% 13.78% 15.94%
LEISURE
(INCL. 3% SALES CHARGE) -4.04% 13.09% 15.59%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Leisure (062)Standard & Poor's 50
02/28/85 9700.00 10000.00
03/31/85 10056.35 10007.00
04/30/85 9942.32 9997.99
05/31/85 10526.74 10575.88
06/30/85 11143.62 10741.92
07/31/85 11086.51 10725.81
08/31/85 11336.37 10634.64
09/30/85 10558.24 10301.77
10/31/85 11122.20 10777.71
11/30/85 12057.38 11517.07
12/31/85 12678.46 12074.49
01/31/86 13113.92 12142.11
02/28/86 14477.43 13050.34
03/31/86 15619.63 13778.55
04/30/86 16090.79 13622.85
05/31/86 17140.19 14347.59
06/30/86 17539.96 14590.06
07/31/86 15861.15 13774.48
08/31/86 16383.42 14796.54
09/30/86 14788.00 13572.87
10/31/86 15546.36 14356.02
11/30/86 15353.19 14704.87
12/31/86 14673.53 14329.90
01/31/87 16218.87 16260.14
02/28/87 17964.52 16902.41
03/31/87 18179.15 17390.89
04/30/87 17764.20 17236.11
05/31/87 18493.94 17386.07
06/30/87 19288.07 18264.06
07/31/87 20711.79 19190.05
08/31/87 21141.05 19905.84
09/30/87 20683.17 19469.90
10/31/87 14780.85 15276.09
11/30/87 13750.62 14017.34
12/31/87 15509.38 15084.06
01/31/88 15748.11 15719.09
02/29/88 17124.78 16451.60
03/31/88 17697.72 15943.25
04/30/88 17809.13 16120.22
05/31/88 17347.59 16260.46
06/30/88 18506.26 17006.82
07/31/88 18660.14 16942.19
08/31/88 17931.23 16366.16
09/30/88 19178.48 17063.36
10/31/88 19178.48 17537.72
11/30/88 18441.47 17286.93
12/31/88 19542.94 17589.45
01/31/89 21211.33 18877.00
02/28/89 20871.17 18406.96
03/31/89 21851.16 18835.84
04/30/89 23090.31 19813.42
05/31/89 24240.37 20615.87
06/30/89 24470.21 20498.36
07/31/89 26523.71 22349.36
08/31/89 26736.42 22787.41
09/30/89 26908.23 22693.98
10/31/89 24969.27 22167.48
11/30/89 25263.79 22619.69
12/31/89 25641.84 23162.57
01/31/90 22532.16 21608.36
02/28/90 22332.37 21887.11
03/31/90 22506.10 22467.12
04/30/90 21628.79 21905.44
05/31/90 23418.16 24041.22
06/30/90 23148.88 23877.74
07/31/90 22349.75 23801.33
08/31/90 19769.93 21649.69
09/30/90 17893.70 20595.35
10/31/90 17685.23 20506.79
11/30/90 19092.40 21831.53
12/31/90 19927.43 22440.63
01/31/91 21041.83 23419.04
02/28/91 22656.38 25093.50
03/31/91 23033.69 25700.76
04/30/91 23095.12 25762.44
05/31/91 23893.62 26875.38
06/30/91 22551.08 25644.49
07/31/91 23630.37 26839.52
08/31/91 23876.07 27475.62
09/30/91 24490.30 27016.78
10/31/91 25227.38 27378.80
11/30/91 24016.46 26275.44
12/31/91 26490.94 29281.34
01/31/92 27087.62 28736.71
02/29/92 28035.29 29110.29
03/31/92 27464.94 28542.64
04/30/92 27772.05 29381.79
05/31/92 27938.77 29525.76
06/30/92 27508.81 29085.83
07/31/92 27640.43 30275.44
08/31/92 27245.57 29654.79
09/30/92 27780.83 30004.72
10/31/92 27991.42 30109.74
11/30/92 29895.54 31136.48
12/31/92 30790.56 31519.46
01/31/93 31553.97 31784.22
02/28/93 31387.24 32216.49
03/31/93 33019.35 32896.25
04/30/93 32275.19 32100.16
05/31/93 34593.60 32960.45
06/30/93 35524.62 33056.03
07/31/93 36473.89 32923.81
08/31/93 38983.98 34171.62
09/30/93 40928.16 33908.50
10/31/93 43191.80 34610.41
11/30/93 41585.35 34281.61
12/31/93 42969.36 34696.42
01/31/94 43415.96 35876.09
02/28/94 43045.37 34903.85
03/31/94 40441.75 33382.04
04/30/94 40523.28 33809.33
05/31/94 40094.41 34363.81
06/30/94 38399.83 33521.89
07/31/94 39885.20 34621.41
08/31/94 41475.17 36040.89
09/30/94 41464.71 35157.89
10/31/94 41318.26 35948.94
11/30/94 39550.47 34639.68
12/31/94 40031.64 35153.39
01/31/95 40763.87 36064.91
02/28/95 42583.96 37470.36
Let's say you invested $10,000 in Fidelity Select Leisure Portfolio on
February 28, 1985 and paid a 3% sales charge. By February 28, 1995, your
investment would have grown to $42,584 - a 325.84% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $37,470 over
the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Capital Cities/ABC, Inc. 5.7
Viacom, Inc. Class B (non-vtg.) 4.9
Disney (Walt) Co. 3.7
Omnicom Group, Inc. 2.2
Scientific-Atlanta, Inc. 2.2
General Instrument Corp. 2.1
Gaylord Entertainment Co. Class A 2.1
Carmike Cinemas, Inc. Class A 1.9
News Corp. Ltd. (vtg.) pfd. sponsored ADR 1.9
ADVO-Systems, Inc. 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 53.8
Row: 1, Col: 2, Value: 5.1
Row: 1, Col: 3, Value: 6.0
Row: 1, Col: 4, Value: 6.1
Row: 1, Col: 5, Value: 14.0
Row: 1, Col: 6, Value: 15.0
Television Broadcasting 15.0%
Cable TV Operators 14.0%
Advertising Agencies 6.1%
Motion Picture Production 6.0%
Hotels, Motels, & Tourist
Courts 5.1%
All Others 53.8%*
* INCLUDES SHORT-TERM INVESTMENTS
LEISURE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Deborah Wheeler,
Portfolio Manager of
Fidelity Select Leisure
Portfolio
Q. DEBORAH, HOW DID THE FUND PERFORM?
A. The fund returned -1.07% for the twelve months ended February 28, 1995.
That trailed the S&P 500's 7.36% return during the same period.
Q. WHAT FACTORS LED TO DISAPPOINTING RESULTS?
A. Few of the stocks in the fund were terrible performers, but a number of
investments lagged the market by a modest margin. Stocks of boat
manufacturers such as Brunswick Corp. suffered because investors worried
that higher interest rates would make for slower boat sales. The fund owned
golf equipment makers such as Calloway Golf and Cobra, and their stocks
lost ground because investors don't anticipate exciting new products that
will drive their future sales.
Q. WHAT ABOUT THE FUND'S INVESTMENT IN THEATER CHAINS?
A. Theater chains such as Regal Cinemas and AMC Cinemas were a
disappointment. I had expected them to perform well because the number of
new movies made each year has grown faster than the number of theater
screens to show them on. As a result, theater owners should be able to
negotiate better prices with movie studios. There weren't many hit movies
during the first two months of 1995, so the stocks haven't performed well
recently-but I haven't sold a single share. There will be many new movies
looking for screens this summer, and I think these companies and their
stocks may benefit.
Q. WHICH INVESTMENTS CONTRIBUTED MOST TO THE FUND'S PERFORMANCE DURING THE
PERIOD?
A. The fund's three largest positions all posted strong returns. Capital
Cities/ABC, which has delivered better than 20% earnings growth for six
consecutive quarters, continued to beat analysts' earnings estimates. It
has the No. 1 rated network, and along with other broadcasters benefited
from a very strong advertising climate. Viacom completed its purchases of
Paramount and Blockbuster in September, and management proceeded to
restructure operations. For example, they cut Paramount's overhead sharply
and integrated its television operations with Viacom's. Those moves helped
boost the stock price significantly. Finally, Disney benefited from the
success of THE LION KING in theaters last summer, as well as the beginnings
of a turnaround in its Florida and California theme parks, where attendance
was up for the first time in two years.
Q. DID YOU MAKE SIGNIFICANT CHANGES IN THE FUND'S INVESTMENTS DURING THE
PERIOD?
A. Yes. The fund had a large investment in hotels such as La Quinta Inns,
Hilton Hotels and Marriott at the end of the period. As those stocks'
prices climbed sharply, I reduced the fund's positions in them. Several of
the fund's investments in gaming shares also posted significant gains, and
I took profits in those stocks as well. For example, the fund had a 3%
investment in Caesars, but its stock price moved higher when ITT acquired
the firm, and I sold the fund's shares at that point. I also sold most of
the fund's investment in hotel and gaming company Promus when its share
price rose after management announced that the firm was spinning off its
casinos.
Q. ARE YOU STILL OPTIMISTIC ABOUT THE BROADCASTING
INDUSTRY'S PROSPECTS?
A. Broadcasting stocks remain the fund's greatest single sector investment.
For example, apart from ABC/Capital Cities, the fund holds shares of News
Corp., a newspaper conglomerate, which owns Fox Broadcasting and its
television stations. The fund also owns radio broadcasters such as Infinity
Broadcasting and Clear Channel. Demand for advertising has remained strong
in 1995, which should fuel profit growth among broadcasters. Moreover, new
federal regulations in 1992 let companies own more radio stations, and
under proposed telecommunications legislation now pending in Congress, they
would be able to own even more stations. Broadcasters such as Cap Cities,
News Corp. and Infinity could take advantage of those rule changes, if
implemented, to make acquisitions that will give them access to wider
markets.
Q. WHAT IS YOUR STRATEGY GOING FORWARD?
A. The fund has made a significant recent investment in cable equipment
providers. I don't know whether telephone or cable companies will win the
battle for consumers' hearts as the information superhighway develops, but
I do know that they will spend billions of dollars on wiring to allow
consumers to have video on demand. I have invested 5% of the fund's assets
in General Instrument and Scientific-Atlanta, which make converter boxes
that are used for interactive television. I also plan to maintain the
fund's sizable investment in the broadcasting industry. Beyond that, I am
choosing stocks mostly on an individual company basis rather than making
large sector bets. In the current market environment, the best performers
are likely to be companies that show strong earnings momentum, which is my
focus.
FUND FACTS
START DATE: May 8, 1984
SIZE: as of February 28, 1995, more than
$69 million
MANAGER: Deborah Wheeler, since 1992;
manager, Fidelity Select Food and Agriculture
Portfolio, 1991-1993; Fidelity Select Retailing
Portfolio 1989-1991; Fidelity Select Housing
Portfolio, 1986-1988; joined Fidelity in 1986
(checkmark)
LEISURE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.1%
SHARES VALUE (NOTE 1)
ADVERTISING - 6.1%
ADVERTISING AGENCIES - 6.1%
ADVO-Systems, Inc. 70,400 $ 1,328,789 00758510
Interpublic Group of Companies, Inc. 12,500 426,563 46069010
Omnicom Group, Inc. 30,100 1,599,063 68191910
Saatchi & Saatchi Co. sponsored ADR (a) 165,000 742,500 78514340
WPP Group PLC ADR 75,000 253,125 92930920
4,350,040
AIR TRANSPORTATION - 0.8%
AIR TRANSPORTATION, MAJOR NATIONAL - 0.8%
KLM Royal Dutch Airlines (a) 20,000 585,000 48251610
BEVERAGES - 1.1%
SOFT DRINKS - 1.1%
Celestial Seasonings, Inc. (a) 2,000 35,000 15101610
Dr. Pepper/Seven-Up Companies, Inc. (a) 9,900 325,463 25613130
Emvasa del Valle de Enah Ord. (a) 51,500 64,580 29299E22
PepsiCo, Inc. 8,441 330,254 71344810
755,297
BROADCASTING - 32.8%
CABLE TV OPERATORS - 14.0%
BET Holdings, Inc. Class A (a) 16,600 251,075 08658510
Cablevision Systems Corp. (a) 10,000 560,000 12686C10
Gaylord Entertainment Co. Class A 55,900 1,467,375 36790110
Interactive Network, Inc. (a) 100 175 45837P10
International Family Entertainment
Class B (a) 7,000 91,000 45950M10
NTN Communications, Inc. (a) 1,000 6,625 62941030
People's Choice TV Corp. (a) 9,100 180,294 71084710
Tele-Communications, Inc. Class A (a) 6,500 147,875 87924V10
Time Warner, Inc. 19,225 742,566 88731510
Turner Broadcasting System, Inc. Class B 61,100 1,153,263 90026250
Valuevision International, Inc. (a) 132,900 764,175 92047K10
Viacom, Inc. Class B (a):
(non-vtg.) 77,855 3,484,011 92552430
(warrants) 285,000 1,140,000 92552412
Video Jukebox Network, Inc. (a) 500 1,000 92656G10
9,989,434
RADIO BROADCASTING - 3.8%
Broadcasting Partners, Inc. Class A (a) 2,300 39,100 11131910
Clear Channel Communications, Inc. (a) 8,625 490,547 18450210
EZ Communications, Inc. (a) 48,700 693,975 26928810
Emmis Broadcasting Corp. Class A (a) 40,900 654,400 29152510
Evergreen Media Corp. Class A (a) 500 7,031 30024810
Infinity Broadcasting Corp. (a) 12,500 440,625 45662610
SFX Broadcasting, Inc. (a) 5,600 109,200 78417410
Saga Communications, Inc. Class A (a) 15,400 271,425 78659810
2,706,303
TELEVISION BROADCASTING - 15.0%
British Sky Broadcasting Group ADR 10,000 241,250 11101310
CBS, Inc. 505 32,573 12484510
Capital Cities/ABC, Inc. 46,100 4,079,850 13985910
Carlton Communications 75,000 1,031,395 14399999
Central European Media Class C (a) 12,000 115,500 15399422
Chris-Craft Industries, Inc. 30 1,065 17052010
Citicasters, Inc. (a) 25,000 700,000 17293610
Granite Broadcasting Corp. (a) 84,700 582,313 38724110
Grupo Televisa GDS (b) 10,000 165,000 40049J20
Heritage Media Corp. Class A (a) 45,000 1,153,125 42724120
Home Shopping Network, Inc. (a) 96,300 854,663 43735110
Jacor Communications, Inc. Class A (a) 100 1,388 46985840
Lin Television Corp. (a) 1,500 44,250 53277610
SHARES VALUE (NOTE 1)
Multimedia, Inc. (a) 800 $ 30,400 62545K10
New World Communications Group, Inc.
Class A (a) 39,000 614,250 64927A10
Renaissance Communications Corp. (a) 13,500 394,875 75966110
Scandinavian Broadcasting Corp. (a) 18,100 434,400 80699E92
Silver King Communications, Inc. (a) 20,700 207,000 82774010
Westwood One, Inc. (a) 5,000 56,563 96181510
10,739,860
TOTAL BROADCASTING 23,435,597
CELLULAR - 2.8%
CELLULAR & COMMUNICATION SERVICES - 2.8%
Cellular Communications, Inc. (a):
Class P 19,000 989,710 15091793
Series A (redeemable) 9,600 487,200 15091710
LIN Broadcasting Corp. 1,000 129,375 53276310
Rogers Communications, Inc. Class B (a) 32,000 400,130 77510920
2,006,415
COMMUNICATIONS EQUIPMENT - 2.1%
TELEPHONE INTERCONNECT SYSTEMS - 2.1%
General Instrument Corp. (a) 47,000 1,492,250 37012110
COMPUTER SERVICES & SOFTWARE - 1.7%
PREPACKAGED COMPUTER SOFTWARE - 1.7%
Sierra On-Line, Inc. (a) 30,500 1,181,875 82640910
Spectrum Holobyte, Inc. (a) 1,900 25,650 84762J10
1,207,525
CONSUMER ELECTRONICS - 1.1%
RADIOS, TELEVISIONS, STEREOS - 1.1%
Harman International Industries, Inc. 19,500 819,000 41308610
CREDIT & OTHER FINANCE - 0.7%
FINANCIAL SERVICES - 0.7%
American Express Co. 14,200 479,250 02581610
DRUGS & PHARMACEUTICALS - 0.8%
BIOTECHNOLOGY - 0.8%
Idexx Laboratories (a) 15,000 570,000 45168D10
ELECTRICAL EQUIPMENT - 4.0%
ELECTRICAL MACHINERY - 1.0%
Philips Electronics NV 22,900 752,838 71833750
TV & RADIO COMMUNICATION EQUIPMENT - 3.0%
California Amplifier, Inc. (a) 32,300 209,950 12990010
Leitch Technology (a) 30,600 357,850 52543H10
Scientific-Atlanta, Inc. 67,000 1,566,125 80865510
2,133,925
TOTAL ELECTRICAL EQUIPMENT 2,886,763
ENTERTAINMENT - 12.9%
AMUSEMENT - 0.4%
Iwerks Entertainment, Inc. (a) 200 900 46591610
Mountasia Entertainment International (a) 26,000 214,500 62454710
Scientific Games Holdings Corp. (a) 1,900 85,500 80874710
300,900
CRUISES - 0.2%
Carnival Cruise Lines, Inc. Class A 3,000 71,250 14365810
Royal Caribbean Cruises Ltd. 1,000 25,500 78015392
96,750
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ENTERTAINMENT - CONTINUED
MOTION PICTURE DISTRIBUTION - 0.0%
All American Communications (a) 2,500 $ 21,875 01648020
MOTION PICTURE PRODUCTION - 6.0%
Cinergi Pictures Entertainment, Inc. (a) 118,100 804,556 17247010
Disney (Walt) Co. 50,000 2,668,750 25468710
Samuel Goldwyn Company (a) 10,500 97,125 38157530
King World Productions, Inc. (a) 100 3,563 49566710
Spelling Entertainment Group, Inc. 65,000 690,625 84780710
4,264,619
MOVIE THEATERS - 4.1%
AMC Entertainment, Inc. (a) 53,900 626,588 00166910
Carmike Cinemas, Inc. Class A (a) 60,400 1,389,200 14343610
Cineplex Odeon Corp. (a) 100 230 17245510
GC Cos., Inc. (a) 500 15,125 36155Q10
Regal Cinemas, Inc. (a) 42,400 916,900 75875410
2,948,043
RECORDS & CDS - 0.3%
PolyGram NV ADR 4,200 207,900 73173310
RECREATIONAL SERVICES - 1.5%
Cedar Fair LP (depositary units) 6,000 192,000 15018510
Discovery Zone, Inc. (a) 100 694 25468B10
Players International, Inc. (a) 30,000 720,000 72790310
S-K-I Ltd. 10,000 153,750 78440610
1,066,444
THEATRICAL PRODUCERS & SERVICES - 0.4%
Live Entertainment of Canada, Inc. (a) 40,000 302,256 53790110
TOTAL ENTERTAINMENT 9,208,787
FOODS - 0.5%
CEREAL BREAKFAST FOODS - 0.5%
RalCorp Holdings, Inc. (a) 14,800 373,700 75102510
HOUSEHOLD PRODUCTS - 0.0%
MANUFACTURED PRODUCTS - 0.0%
Windmere Corp. (warrants) (a) 845 - 97341193
LEISURE DURABLES & TOYS - 3.2%
MOTORCYCLES - 0.8%
Harley Davidson, Inc. 19,600 529,200 41282210
SPORTING & ATHLETIC GOODS - 1.7%
Cobra Golf, Inc. (a) 4,200 136,763 19090710
Coleman, Inc. (a) 30,000 1,057,500 19355910
1,194,263
TOYS & GAMES - 0.6%
Hasbro, Inc. 11,000 346,500 41805610
Mattel, Inc. 4,375 97,891 57708110
444,391
TRAVEL TRAILERS AND CAMPERS - 0.1%
Brunswick Corp. 4,600 91,425 11704310
TOTAL LEISURE DURABLES & TOYS 2,259,279
LODGING & GAMING - 6.5%
HOTELS, MOTELS, & TOURIST COURTS - 5.1%
Club Med, Inc. 1,700 38,463 18947010
Hammons (John Q.) Hotels, Inc.
Class A (a) 15,000 198,750 40862310
Hospitality Franchise Systems, Inc. 4,600 130,525 44091210
Host Marriott Corp. (a) 60,000 660,000 44107810
La Quinta Motor Inns, Inc. 23,100 574,613 50419510
Marriott International, Inc. 24,600 762,600 57190010
SHARES VALUE (NOTE 1)
Mirage Resorts, Inc. (a) 41,400 $ 988,425 60462E10
Promus Companies, Inc. (a) 7,450 266,338 74342A10
3,619,714
LODGING PLACES, OTHER THAN HOTEL, MOTEL - 0.6%
Sholodge, Inc. (a) 20,333 421,910 82503410
RACING & GAMING - 0.8%
President Casinos, Inc. (a) 32,700 212,550 74082210
Speedway Motorsports (a) 1,500 27,000 84778810
WMS Industries, Inc. (a) 15,000 326,250 92929710
565,800
TOTAL LODGING & GAMING 4,607,424
PRINTING - 1.2%
COMMERCIAL PRINTING - 1.2%
Skybox International, Inc. (a) 66,700 800,400 83091410
Valassis Communications, Inc. (a) 5,000 85,625 91886610
886,025
PUBLISHING - 3.1%
NEWSPAPERS - 3.1%
News Corp. Ltd. :
ADR 32,000 580,000 65248770
(vtg.) pfd. sponsored ADR 83,000 1,338,375 65248780
Scripps (E.W.) Co. Class A 9,700 282,513 81103910
2,200,888
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
DURABLE GOODS - WHOLESALE - 1.2%
Integrity Music, Inc. Class A (a) 17,500 124,688 45813H10
Sodak Gaming, Inc. (a) 45,000 720,000 83377710
844,688
HOBBY, TOY, & GAME SHOPS - 0.5%
Toys "R" Us, Inc. (a) 14,200 395,825 89233510
RETAIL, GENERAL - 0.2%
Sotheby's Holdings, Inc. Class A 12,500 140,625 83589810
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,381,138
SERVICES - 1.8%
GENERAL SERVICES - 0.8%
Children's Discovery Centers
of America, Inc. (a) 37,300 573,488 16875720
MANAGEMENT CONSULTING SERVICES - 1.0%
Dimac Corp. (a) 50,000 693,750 25391430
PUBLIC RELATIONS SERVICES - 0.0%
True North Communications 3,000 47,625 89784410
TOTAL SERVICES 1,314,863
TELEPHONE SERVICES - 0.9%
SBC Communications, Inc. 15,000 624,375 84533310
TOBACCO - 2.1%
CIGARETTES - 0.8%
RJR Nabisco Holdings Corp. 103,400 581,625 74960K10
TOBACCO MANUFACTURERS - 1.3%
Philip Morris Companies, Inc. 15,000 911,250 71815410
TOTAL TOBACCO 1,492,875
TOTAL COMMON STOCKS
(Cost $56,753,315) 62,936,491
CONVERTIBLE BONDS - 1.1%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
LODGING & GAMING - 1.1%
LODGING PLACES, OTHER THAN HOTEL, MOTEL - 0.4%
Sholodge, Inc. 7 1/2%,
5/1/04 $ 250,000 $ 258,750 825034AA
RACING & GAMING - 0.7%
Argosy Gaming Co. 12%,
6/1/01 550,000 500,500 040228AB
TOTAL CONVERTIBLE BONDS
(Cost $861,220) 759,250
REPURCHASE AGREEMENTS - 10.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $7,699,300 7,698,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $65,312,535) $ 71,393,741
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $165,000 or 0.2% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $69,352,783 and $102,708,412, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $55,302 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,127,000 and $2,043,200,
respectively. The weighted average interest rate paid was 4.7% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 89.3%
United Kingdom 3.2
Australia 2.7
Netherlands 2.2
Canada 1.5
Others (individually less than 1%) 1.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $65,835,024. Net unrealized appreciation aggregated
$5,558,717, of which $8,209,813 related to appreciated investment
securities and $2,651,096 related to depreciated investment securities.
The fund hereby designates $389,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
LEISURE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $7,698,000) (cost $65,312,535) - See $ 71,393,741
accompanying schedule
Cash 800
Receivable for investments sold 1,477,766
Receivable for fund shares sold 296,558
Dividends receivable 16,502
Interest receivable 22,515
Redemption fees receivable 145
Other receivables 30,007
TOTAL ASSETS 73,238,034
LIABILITIES
Payable for investments purchased $ 3,052,233
Payable for fund shares redeemed 508,102
Accrued management fee 34,887
Other payables and 73,582
accrued expenses
TOTAL LIABILITIES 3,668,804
NET ASSETS $ 69,569,230
Net Assets consist of:
Paid in capital $ 63,319,916
Accumulated net investment (loss) (68,073
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 236,173
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 6,081,214
NET ASSETS, for 1,708,954 shares outstanding $ 69,569,230
NET ASSET VALUE and redemption price per share ($69,569,230 (divided by) 1,708,954 shares) $40.71
Maximum offering price per share (100/97.00 of $40.71) $41.97
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 459,991
Dividends
Interest 343,376
TOTAL INCOME 803,367
EXPENSES
Management fee $ 452,572
Transfer agent 632,252
Fees
Redemption fees (32,502
)
Accounting fees and expenses 73,182
Non-interested trustees' compensation 1,360
Custodian fees and expenses 17,793
Registration fees 19,745
Audit 26,591
Legal 1,716
Interest 1,333
Reports to shareholders 4,985
Miscellaneous 751
Total expenses before reductions 1,199,778
Expense reductions (15,509 1,184,269
)
NET INVESTMENT INCOME (LOSS) (380,902
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 211,310
Foreign currency transactions (7,409 203,901
)
Change in net unrealized appreciation (depreciation) on:
Investment securities (3,201,878
)
Assets and liabilities in foreign currencies 8 (3,201,870
)
NET GAIN (LOSS) (2,997,969
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (3,378,871
)
OTHER INFORMATION $210,050
Sales Charges Paid to FDC
Deferred sales charges withheld $24,969
by FDC
Exchange fees withheld by FSC $21,998
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (380,902 $ (603,590
Net investment income (loss) ) )
Net realized gain (loss) 203,901 19,779,082
Change in net unrealized appreciation (depreciation) (3,201,870 3,359,954
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (3,378,871 22,535,446
)
Distributions to shareholders from net realized gains (8,699,446 (6,700,464
) )
Share transactions 28,459,652 171,635,469
Net proceeds from sales of shares
Reinvestment of distributions 8,558,337 6,615,913
Cost of shares redeemed (61,250,156 (133,273,761
) )
Paid in capital portion of redemption fees 46,644 196,293
Net increase (decrease) in net assets resulting from share transactions (24,185,523 45,173,914
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (36,263,840 61,008,896
)
NET ASSETS
Beginning of period 105,833,070 44,824,174
End of period (including undistributed net investment income (loss) of $(68,073) and $167,185,
respectively) $ 69,569,230 $ 105,833,070
OTHER INFORMATION
Shares
Sold 715,555 3,957,420
Issued in reinvestment of distributions 219,557 158,780
Redeemed (1,562,185 (3,033,266
) )
Net increase (decrease) (627,073) 1,082,934
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 45.30 $ 35.77 $ 31.65 $ 26.32 $ 24.90
Income from Investment Operations
Net investment income (loss) (.21) (.29) (.11) (.08) .08
Net realized and unrealized gain (loss) (.48) 12.98 4.21 5.40 1.55
Total from investment operations (.69) 12.69 4.10 5.32 1.63
Less Distributions - - - - (.23)
From net investment income
From net realized gain (3.93) (3.26) - - -
Total distributions (3.93) (3.26) - - (.23)
Redemption fees added to paid in capital .03 .10 .02 .01 .02
Net asset value, end of period $ 40.71 $ 45.30 $ 35.77 $ 31.65 $ 26.32
TOTAL RETURN B, C (1.07)% 37.14% 13.02% 20.25% 6.78%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 69,569 $ 105,833 $ 44,824 $ 40,051 $ 40,727
Ratio of expenses to average net assets 1.62% 1.53% 1.90% A 2.21% 2.27%
Ratio of expenses to average net assets before expense reductions 1.64% 1.55% 1.90% A 2.21% 2.27%
Ratio of net investment income (loss) to average net assets (.52)% (.69)% (.39)% (.28)% .34%
A
Portfolio turnover rate 103% 170% 109% A 45% 75%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
MULTIMEDIA PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
MULTIMEDIA 9.35% 120.92% 268.28%
MULTIMEDIA
(INCL. 3% SALES CHARGE) 6.07% 114.30% 257.23%
S&P 500 7.36% 71.20% 158.12%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 30, 1986. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
MULTIMEDIA 9.35% 17.18% 16.22%
MULTIMEDIA
(INCL. 3% SALES CHARGE) 6.07% 16.47% 15.81%
S&P 500 7.36% 11.35% 11.55%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Multimedia (5Standard & Poor's 50
06/30/86 9700.00 10000.00
07/31/86 9253.80 9488.77
08/31/86 9777.60 10192.84
09/30/86 9263.50 9349.89
10/31/86 9700.00 9889.38
11/30/86 9777.60 10129.69
12/31/86 9486.60 9871.39
01/31/87 10621.50 11201.06
02/28/87 11911.60 11643.50
03/31/87 11872.80 11980.00
04/30/87 11688.50 11873.38
05/31/87 12231.70 11976.68
06/30/87 12745.80 12581.50
07/31/87 13725.50 13219.38
08/31/87 13715.80 13712.46
09/30/87 13386.00 13412.16
10/31/87 10660.30 10523.18
11/30/87 9923.10 9656.07
12/31/87 11377.71 10390.90
01/31/88 11566.11 10828.35
02/29/88 12340.68 11332.96
03/31/88 12874.50 10982.77
04/30/88 13031.50 11104.68
05/31/88 12811.69 11201.29
06/30/88 13254.21 11715.43
07/31/88 13232.55 11670.91
08/31/88 12734.43 11274.10
09/30/88 13535.75 11754.37
10/31/88 13687.35 12081.14
11/30/88 13579.06 11908.38
12/31/88 14432.32 12116.78
01/31/89 16155.75 13003.73
02/28/89 16122.39 12679.94
03/31/89 16878.48 12975.38
04/30/89 18012.60 13648.80
05/31/89 18879.88 14201.58
06/30/89 19266.46 14120.63
07/31/89 20732.14 15395.72
08/31/89 20709.77 15697.48
09/30/89 20385.30 15633.12
10/31/89 19009.13 15270.43
11/30/89 19121.01 15581.95
12/31/89 19129.11 15955.91
01/31/90 16589.03 14885.27
02/28/90 16170.05 15077.29
03/31/90 16012.93 15476.84
04/30/90 15253.53 15089.92
05/31/90 16706.87 16561.19
06/30/90 16562.85 16448.57
07/31/90 15646.33 16395.93
08/31/90 13616.89 14913.74
09/30/90 12451.60 14187.44
10/31/90 11914.78 14126.44
11/30/90 13145.53 15039.00
12/31/90 14114.43 15458.59
01/31/91 14873.83 16132.59
02/28/91 15973.66 17286.07
03/31/91 16405.73 17704.39
04/30/91 16968.74 17746.88
05/31/91 17060.39 18513.55
06/30/91 15711.79 17665.63
07/31/91 16300.98 18488.84
08/31/91 16811.62 18927.03
09/30/91 17832.88 18610.95
10/31/91 18736.31 18860.33
11/30/91 17453.18 18100.26
12/31/91 19456.44 20170.93
01/31/92 19967.07 19795.75
02/29/92 21079.99 20053.10
03/31/92 20543.17 19662.06
04/30/92 20857.40 20240.13
05/31/92 21171.64 20339.30
06/30/92 21250.20 20036.25
07/31/92 21302.57 20855.73
08/31/92 21014.52 20428.19
09/30/92 20883.59 20669.24
10/31/92 21224.01 20741.58
11/30/92 22769.01 21448.87
12/31/92 23639.19 21712.69
01/31/93 24116.75 21895.08
02/28/93 24222.88 22192.85
03/31/93 25177.99 22661.12
04/30/93 24526.89 22112.72
05/31/93 26198.87 22705.34
06/30/93 27021.37 22771.19
07/31/93 28032.65 22680.10
08/31/93 30419.27 23539.68
09/30/93 31147.39 23358.43
10/31/93 33480.08 23841.94
11/30/93 31295.15 23615.45
12/31/93 32626.92 23901.19
01/31/94 33092.24 24713.83
02/28/94 32667.98 24044.09
03/31/94 30669.86 22995.77
04/30/94 30684.73 23290.11
05/31/94 31813.18 23672.07
06/30/94 31102.10 23092.10
07/31/94 31859.56 23849.53
08/31/94 33776.39 24827.36
09/30/94 33544.51 24219.09
10/31/94 34301.97 24764.01
11/30/94 33219.89 23862.11
12/31/94 33933.14 24215.98
01/31/95 34316.75 24843.91
02/28/95 35723.30 25812.07
Let's say you invested $10,000 in Fidelity Select Multimedia Portfolio on
June 30, 1986, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $35,723 - a 257.23%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $25,812 over the same period - a 158.12% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Viacom, Inc. Class B (non-vtg.) 7.9
News Corp. Ltd. (vtg.) pfd. sponsored ADR 7.4
Scientific-Atlanta, Inc. 5.5
General Instrument Corp. 4.9
Capital Cities/ABC, Inc. 3.8
Rogers Communications, Inc. Class B 3.8
NYNEX Corp. 3.7
Meredith Corp. 3.6
People's Choice TV Corp. 3.4
California Amplifier, Inc. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 40.2
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 7.7
Row: 1, Col: 4, Value: 11.3
Row: 1, Col: 5, Value: 14.5
Row: 1, Col: 6, Value: 18.9
Cable TV Operators 18.9%
Newspapers 14.5%
TV & Radio Communication
Equipment 11.3%
Telephone Services 7.7%
Television Broadcasting 7.4%
All Others 40.2%*
* INCLUDES SHORT-TERM INVESTMENTS
MULTIMEDIA PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen DuFour,
Portfolio Manager of
Fidelity Select Multimedia Portfolio
Q. STEVE, WHAT WAS PERFORMANCE LIKE?
A. The fund did pretty well, especially given that so many stocks in the
sector did poorly. For the year ended February 28, 1995, the fund had a
9.35% return compared to the S&P 500's 7.36% return.
Q. WHICH GROUPS IN PARTICULAR WERE DOWN?
A. Generally, cable, newspapers and wireless cable. U.S. cable stocks were
affected by increased competition, federal regulation and rising capital
expenditures related to rewiring and the installation of advanced
electronics. Mediocre revenue growth and rising newsprint costs hurt
newspaper stocks, while higher interest rates undermined wireless cable
stocks.
Q. WHAT WAS YOUR STRATEGY?
A. I avoided companies with huge capital expenditures, such as cable
operators, and emphasized those that didn't have large capital
expenditures, such as equipment suppliers and entertainment companies.
During the period, as much as 20% of the fund was in equipment stocks such
as General Instrument and Scientific-Atlanta, which sell to cable and phone
companies; California Amplifier, the leading supplier to wireless cable
companies; and Leitch Technology, which helps broadcasters upgrade their
studios from analog to digital. All were top contributors to performance.
Q. HOW DO YOU EXPLAIN THE FACT THAT ONE OF THE FUND'S LARGEST
CONCENTRATIONS -19% OF ASSETS - WAS IN CABLE OPERATORS AT THE END OF
FEBRUARY?
A. Sometimes stocks are classified as cable companies, but actually have
other businesses. For example, I consider Viacom to be an entertainment
company. It's selling its cable system, which means lower capital spending.
That, along with the acquisition of Paramount and Blockbuster, should make
the company more of a supplier of entertainment than a distributor. Viacom
- - up over 50% for the period - definitely helped performance. Some
companies represent newer technologies that don't have high capital
expenditures. Wireless cable, for instance, broadcasts a signal in
microwave to a home antenna, avoiding the wiring expenses of conventional
cable. The fund also owned some Canadian cable companies - such as Shaw
Cablesystems - which have been selling at better prices, currently face
fewer regulations, and enjoyed less competition than U.S. cable companies.
Q. HAVE YOU MADE ANY CHANGES SINCE SEPTEMBER?
A. I increased our investment in entertainment companies like Viacom and
News Corp. The latter's stock price fell 24% in 1994 as the company faced
higher newsprint prices, a cover price war in the U.K., and high start-up
costs for its Australian newspaper plant. Since then, the stock has
rebounded as News Corp. has taken steps to minimize the newsprint problem
and raised its U.K. cover prices. I also cut back on book publishers, whose
stock prices fell as forecasted demand for textbooks failed to materialize
and paper costs continued to rise. Finally, I sold Time Warner because its
plans to buy more cable companies and increase capital spending didn't fit
my strategy.
Q. MANY INVESTORS SEEM TO HAVE WRITTEN OFF THE BROADCASTERS. WHAT'S YOUR
THINKING?
A. Many people thought the cable companies would take market share away
from the major networks. But I think the networks will retain the market
share and be able to charge higher rates. Another positive is that the
government recently expanded the amount of programming broadcasters can
produce or own. The fund owned Capital Cities/ABC - a top contributor to
performance.
Q. WERE THERE ANY DISAPPOINTMENTS?
A. Sure. People's Choice TV, a large wireless cable operator, fell 60%
during the period. As interest rates rose, wireless cable companies - which
used to finance their growth with debt - had to instead raise money by
issuing new stock. That hurt stock prices. Then several operators ran out
of money and had to stop adding new subscribers. As investors speculated
that the industry might never amount to anything, prices fell further. But
some companies, including People's Choice, seem to have successfully
weathered the storm and may see improvement ahead.
Q. WHAT'S YOUR OUTLOOK FOR 1995?
A. More of the same, unless there are legislative changes that give cable
companies freedom to raise their prices or prohibit phone companies from
entering the cable business. Since I don't see either happening soon, I'll
continue to focus on equipment providers and entertainment companies.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1995, more than
$38 million
MANAGER: Stephen DuFour, since 1993;
manager, Fidelity Select Transportation
Portfolio, since December 1994; equity
analyst, media, 1992-1993; joined Fidelity in
1992
(checkmark)
MULTIMEDIA PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.0%
SHARES VALUE (NOTE 1)
ADVERTISING - 1.3%
ADVERTISING AGENCIES - 1.3%
ADVO-Systems, Inc. 26,400 $ 498,294 00758510
BROADCASTING - 26.3%
CABLE TV OPERATORS - 18.9%
ACS Enterprises, Inc. (a) 72,000 864,000 00087230
American Telecasting, Inc. (a) 5,800 68,150 03015110
Cablemaxx, Inc. (a) 26,500 129,188 12685910
Comcast Corp. Class A (Special) 9,600 151,200 20030020
Gaylord Entertainment Co. Class A 20,000 525,000 36790110
People's Choice TV Corp. (a) 65,000 1,287,813 71084710
Shaw Cablesystems Ltd. Class B (b) 50,000 305,855 82028K20
Turner Broadcasting System, Inc.
Class B 20,000 377,500 90026250
Valuevision International, Inc. (a) 100 575 92047K10
Viacom, Inc. Class B (a):
(non-vtg.) 67,284 3,010,959 92552430
(warrants) 125,000 500,000 92552412
7,220,240
TELEVISION BROADCASTING - 7.4%
British Sky Broadcasting Group ADR 22,500 542,813 11101310
Capital Cities/ABC, Inc. 16,500 1,460,250 13985910
Central European Media Class C (a) 2,000 19,250 15399422
Grupo Televisa GDS (b) 10,000 165,000 40049J20
Heritage Media Corp. Class A (a) 24,900 638,063 42724120
2,825,376
TOTAL BROADCASTING 10,045,616
CELLULAR - 5.6%
CELLULAR & COMMUNICATION SERVICES - 5.6%
Airtouch Communications (a) 20,000 545,000 00949T10
Rogers Communications, Inc.
Class B (a) 114,700 1,434,215 77510920
Vodafone Group PLC sponsored ADR 5,300 161,650 92857T10
2,140,865
COMMUNICATIONS EQUIPMENT - 5.6%
TELEPHONE EQUIPMENT - 0.7%
Ericsson (L.M.) Telephone Co.
Class B ADR 5,000 284,375 29482140
TELEPHONE INTERCONNECT SYSTEMS - 4.9%
General Instrument Corp. (a) 58,700 1,863,725 37012110
TOTAL COMMUNICATIONS EQUIPMENT 2,148,100
COMPUTER SERVICES & SOFTWARE - 2.8%
COMPUTER SERVICES - 1.1%
Reuters Holdings PLC ADR Class B 10,000 423,750 76132420
PREPACKAGED COMPUTER SOFTWARE - 1.7%
Electronic Arts, Inc. (a) 30,000 645,000 28551210
General Magic, Inc. (a) 200 3,650 37025310
Spectrum Holobyte, Inc. (a) 300 4,050 84762J10
652,700
TOTAL COMPUTER SERVICES & SOFTWARE 1,076,450
CREDIT & OTHER FINANCE - 0.1%
FINANCIAL SERVICES - 0.1%
Benpress Holdings Corp. GDR (a) 4,860 40,095 08230093
ELECTRICAL EQUIPMENT - 13.6%
ELECTRICAL EQUIPMENT - WHOLESALE - 2.3%
Itel Corp. (a) 25,200 878,850 46564210
SHARES VALUE (NOTE 1)
TV & RADIO COMMUNICATION EQUIPMENT - 11.3%
California Amplifier, Inc. (a) 189,200 $ 1,229,800 12990010
Leitch Technology (a) 83,200 972,977 52543H10
Scientific-Atlanta, Inc. 89,500 2,092,063 80865510
4,294,840
TOTAL ELECTRICAL EQUIPMENT 5,173,690
ENTERTAINMENT - 1.9%
MOTION PICTURE PRODUCTION - 1.9%
Alliance Communications Corp. (a) 25,000 251,880 01855R10
Cinergi Pictures Entertainment, Inc. (a) 5,000 34,063 17247010
Disney (Walt) Co. 8,300 443,013 25468710
728,956
MEDICAL FACILITIES MANAGEMENT - 0.1%
HEALTH SERVICES - 0.1%
Lambert Communications, Inc. (a) 150,000 36,000 51328G10
PUBLISHING - 19.4%
BOOK PUBLISHING & PRINTING - 1.2%
Nelson Thomas, Inc. 18,500 453,250 64037610
NEWSPAPERS - 14.0%
American Publishing Co. Class A 5,000 57,500 02913910
McClatchy Newspapers, Inc. Class A 20,000 472,500 57948910
News Corp. Ltd. (vtg.) pfd.
sponsored ADR 175,000 2,821,875 65248780
Pulitzer Publishing Co. 20,250 683,438 74577110
Scripps (E.W.) Co. Class A 36,000 1,048,500 81103910
Washington Post Co. Class B 1,000 253,250 93964010
5,337,063
PERIODICALS - 4.2%
American Media, Inc. Class A 36,700 266,075 02744L10
Meredith Corp. 28,000 1,361,500 58943310
1,627,575
TOTAL PUBLISHING 7,417,888
SECURITIES INDUSTRY - 0.0%
SECURITY BROKERS & DEALERS - 0.0%
PaineWebber Group, Inc. 100 1,713 69562910
SERVICES - 0.6%
GENERAL SERVICES - 0.6%
Flextech PLC (a) 40,000 219,651 33999392
TELEPHONE SERVICES - 7.7%
Ameritech Corp. 15,000 643,125 03095410
NYNEX Corp. 35,800 1,405,150 67076810
SBC Communications, Inc. 10,000 416,250 84533310
Telephone & Data Systems, Inc. 10,000 456,250 87943310
2,920,775
TOTAL COMMON STOCKS
(Cost $30,267,007) 32,448,093
NONCONVERTIBLE PREFERRED STOCKS - 0.5%
PUBLISHING - 0.5%
NEWSPAPERS - 0.5%
News Corp. Ltd. (ltd. vtg.)
(Cost $175,099) 50,000 198,832 65199093
REPURCHASE AGREEMENTS - 14.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $5,536,935 $ 5,536,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $35,978,106) $ 38,182,925
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $470,855 or 1.2% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities, aggre-
gated $31,002,590 and $46,031,616, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $12,190 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,305,000 and $2,996,000,
respectively. The weighted average interest rate paid was 4.3% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 79.5%
Australia 7.9
Canada 7.8
United Kingdom 3.5
Others (individually less than 1%) 1.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $36,148,320. Net unrealized appreciation aggregated
$2,034,605, of which $4,394,513 related to appreciated investment
securities and $2,359,908 related to depreciated investment securities.
MULTIMEDIA PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $5,536,000) (cost $35,978,106) - See $ 38,182,925
accompanying schedule
Cash 101
Receivable for fund shares sold 432,914
Dividends receivable 9,784
Redemption fees receivable 205
Other receivables 3,800
TOTAL ASSETS 38,629,729
LIABILITIES
Payable for investments purchased $ 4,448
Payable for fund shares redeemed 407,671
Accrued management fee 17,774
Other payables and accrued expenses 42,731
TOTAL LIABILITIES 472,624
NET ASSETS $ 38,157,105
Net Assets consist of:
Paid in capital $ 36,118,699
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (166,413
)
Net unrealized appreciation (depreciation) on investments 2,204,819
NET ASSETS, for 1,706,892 shares outstanding $ 38,157,105
NET ASSET VALUE and redemption price per share ($38,157,105 (divided by) 1,706,892 shares) $22.35
Maximum offering price per share (100/97.00 of $22.35) $23.04
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 489,346
Dividends
Interest 130,368
TOTAL INCOME 619,714
EXPENSES
Management fee $ 195,423
Transfer agent 359,438
Fees
Redemption fees (25,406
)
Accounting fees and expenses 45,584
Non-interested trustees' compensation 506
Custodian fees and expenses 16,553
Registration fees 27,308
Audit 23,059
Legal 936
Interest 1,418
Reports to shareholders 1,416
Miscellaneous 368
Total expenses before reductions 646,603
Expense reductions (5,649 640,954
)
NET INVESTMENT INCOME (LOSS) (21,240
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 713,640
Foreign currency transactions (20 713,620
)
Change in net unrealized appreciation (depreciation) on investment securities (46,862
)
NET GAIN (LOSS) 666,758
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 645,518
OTHER INFORMATION $177,841
Sales Charges Paid to FDC
Deferred sales charges withheld $3,103
by FDC
Exchange fees withheld by FSC $18,278
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (21,240 $ (263,237
Net investment income (loss) ) )
Net realized gain (loss) 713,620 10,978,209
Change in net unrealized appreciation (depreciation) (46,862 135,110
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 645,518 10,850,082
Distributions to shareholders (5,781,614 (1,336,869
From net realized gains ) )
Share transactions 35,047,458 242,015,079
Net proceeds from sales of shares
Reinvestment of distributions 5,728,603 1,323,568
Cost of shares redeemed (46,707,859 (220,542,573
) )
Paid in capital portion of redemption fees 48,397 219,824
Net increase (decrease) in net assets resulting from share transactions (5,883,401 23,015,898
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (11,019,497 32,529,111
)
NET ASSETS
Beginning of period 49,176,602 16,647,491
End of period (including undistributed net investment income of $0 and $3,010, respectively) $ 38,157,105 $ 49,176,602
OTHER INFORMATION
Shares
Sold 1,606,026 10,652,395
Issued in reinvestment of distributions 293,006 60,047
Redeemed (2,252,403 (9,563,667
) )
Net increase (decrease) (353,371 1,148,775
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.87 $ 18.26 $ 15.93 $ 12.96 $ 11.65
Income from Investment Operations
Net investment income (loss) (.01) (.10) (.07) (.17) (.05)
Net realized and unrealized gain (loss) 1.67 6.28 2.61 3.08 1.29
Total from investment operations 1.66 6.18 2.54 2.91 1.24
Less Distributions
From net realized gains (3.21) (.65) (.23) - -
Redemption fees added to paid in capital .03 .08 .02 .06 .07
Net asset value, end of period $ 22.35 $ 23.87 $ 18.26 $ 15.93 $ 12.96
TOTAL RETURN B, C 9.35% 34.86% 16.14% 22.92% 11.24%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 38,157 $ 49,177 $ 16,647 $ 8,393 $ 5,177
Ratio of expenses to average net assets 2.03% 1.63% 2.49% A 2.49% 2.53%
Ratio of expenses to average net assets before expense reductions 2.05% 1.66% 2.54% A 2.78% 2.77%
Ratio of net investment income (loss) to average net assets (.07)% (.42)% (.52)% (1.22)% (.43)%
A
Portfolio turnover rate 107% 340% 70% A 111% 150%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
RETAILING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
RETAILING -4.01% 119.65% 290.27%
RETAILING
(INCL. 3% SALES CHARGE) -6.89% 113.06% 278.57%
S&P 500 7.36% 71.20% 212.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 16, 1985. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
RETAILING -4.01% 17.04% 15.93%
RETAILING
(INCL. 3% SALES CHARGE) -6.89% 16.33% 15.55%
S&P 500 7.36% 11.35% 13.18%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Retailing (04Standard & Poor's 50
12/16/85 9700.00 10000.00
12/31/85 9506.00 10080.42
01/31/86 9583.60 10136.87
02/28/86 10252.90 10895.11
03/31/86 11174.40 11503.06
04/30/86 11378.10 11373.07
05/31/86 12668.20 11978.12
06/30/86 12978.60 12180.55
07/31/86 11271.40 11499.66
08/31/86 11271.40 12352.93
09/30/86 10446.90 11331.35
10/31/86 11368.40 11985.16
11/30/86 11678.80 12276.40
12/31/86 10854.30 11963.36
01/31/87 11756.40 13574.82
02/28/87 13124.10 14111.03
03/31/87 13521.80 14518.83
04/30/87 13104.70 14389.62
05/31/87 13337.50 14514.81
06/30/87 14065.00 15247.80
07/31/87 14773.10 16020.87
08/31/87 15102.90 16618.45
09/30/87 14026.20 16254.50
10/31/87 9835.80 12753.28
11/30/87 9156.80 11702.41
12/31/87 10055.28 12592.97
01/31/88 10690.46 13123.13
02/29/88 11928.53 13734.67
03/31/88 12079.25 13310.27
04/30/88 12456.05 13458.01
05/31/88 12100.78 13575.09
06/30/88 13166.60 14198.19
07/31/88 13048.17 14144.24
08/31/88 13015.88 13663.33
09/30/88 13780.25 14245.39
10/31/88 14070.93 14641.41
11/30/88 13877.14 14432.04
12/31/88 13947.19 14684.60
01/31/89 14636.89 15759.52
02/28/89 14439.83 15367.10
03/31/89 15129.53 15725.16
04/30/89 15983.44 16541.29
05/31/89 17089.14 17211.21
06/30/89 16784.91 17113.11
07/31/89 18138.53 18658.42
08/31/89 19018.38 19024.13
09/30/89 18973.26 18946.13
10/31/89 18059.57 18506.58
11/30/89 18172.37 18884.12
12/31/89 18065.93 19337.33
01/31/90 16654.94 18039.80
02/28/90 17235.16 18272.51
03/31/90 18646.15 18756.73
04/30/90 18382.41 18287.82
05/31/90 20835.16 20070.88
06/30/90 20571.42 19934.40
07/31/90 19727.47 19870.61
08/31/90 16892.30 18074.30
09/30/90 15006.59 17194.08
10/31/90 14307.69 17120.15
11/30/90 16259.34 18226.11
12/31/90 17157.07 18734.62
01/31/91 18822.55 19551.45
02/28/91 20567.33 20949.38
03/31/91 22708.66 21456.35
04/30/91 23025.90 21507.85
05/31/91 24942.52 22436.99
06/30/91 24149.43 21409.37
07/31/91 25695.95 22407.05
08/31/91 27057.41 22938.10
09/30/91 26766.61 22555.03
10/31/91 26264.32 22857.27
11/30/91 25762.04 21936.12
12/31/91 28846.72 24445.61
01/31/92 30446.30 23990.92
02/29/92 31910.33 24302.81
03/31/92 31273.21 23828.90
04/30/92 29998.96 24529.47
05/31/92 30622.53 24649.67
06/30/92 29193.11 24282.39
07/31/92 30491.83 25275.53
08/31/92 29800.12 24757.39
09/30/92 30689.47 25049.52
10/31/92 32792.84 25137.20
11/30/92 35277.36 25994.38
12/31/92 35215.02 26314.11
01/31/93 35457.98 26535.14
02/28/93 34114.55 26896.02
03/31/93 36744.24 27463.53
04/30/93 34635.21 26798.91
05/31/93 36553.70 27517.12
06/30/93 35675.00 27596.92
07/31/93 35850.74 27486.53
08/31/93 37490.97 28528.27
09/30/93 38633.27 28308.61
10/31/93 39233.71 28894.59
11/30/93 39614.48 28620.10
12/31/93 39804.09 28966.40
01/31/94 38030.79 29951.26
02/28/94 39439.93 29139.58
03/31/94 38616.61 27869.09
04/30/94 39788.25 28225.82
05/31/94 37824.97 28688.72
06/30/94 37508.31 27985.85
07/31/94 38141.62 28903.78
08/31/94 40564.07 30088.84
09/30/94 39772.42 29351.66
10/31/94 39946.58 30012.07
11/30/94 38553.28 28919.03
12/31/94 37809.13 29347.90
01/31/95 37508.31 30108.89
02/28/95 37856.63 31282.24
Let's say you invested $10,000 in Fidelity Select Retailing Portfolio on
December 16, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $37,857 - a 278.57%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $31,282 over the same period - a 212.82% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Old American Stores, Inc. 6.8
Sears, Roebuck & Co. 6.7
Circuit City Stores, Inc. 2.9
Lowe's Companies, Inc. 2.9
AnnTaylor Stores Corp. 2.8
Sunglass Hut International, Inc. 2.6
Home Depot, Inc. (The) 2.6
Friedmans, Inc. Class A 2.5
Dayton Hudson Corp. 2.4
Autozone, Inc. 2.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 55.2
Row: 1, Col: 2, Value: 5.8
Row: 1, Col: 3, Value: 6.1
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 10.6
Row: 1, Col: 6, Value: 16.1
Retail, General 16.1%
Department Stores 10.6%
Women's Clothing
Stores 6.2%
Music, TV, & Electronic
Stores 6.1%
Drug Stores 5.8%
All Others 55.2%*
* INCLUDES SHORT-TERM INVESTMENTS
RETAILING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Erin Sullivan,
Portfolio Manager of Fidelity Select Retailing
Portfolio
Q. HOW DID THE FUND PERFORM, ERIN?
A. The fund had generally disappointing performance over the 12 months
ended February 28, 1995. It returned -4.01% for the period, compared with a
7.36% gain for the S&P 500.
Q. WHAT CAUSED THE FUND TO TRAIL THE MARKET?
A. Actually, the fund's performance was more favorable when compared with
the industry in general, where the average retail stock was down about 12%
over the year. But measured against the broad market, retail stocks have
lagged for about the past three years. The primary reason for this is that
there simply are too many retail stores. This over-supply, a trend which
began with new construction of retail space in the mid-1970s and continues
today, has created a super-charged competitive environment in which
retailers are finding it more and more difficult to grow market share. In
addition, retail demand began to show some sluggishness during the period.
Q. WHICH OF THE FUND'S INVESTMENTS HELPED PERFORMANCE?
A. Despite the overall pressure on retail stocks, a number of the fund's
holdings did well over the past 12 months. And fortunately, some of the
best performers also were among the fund's largest holdings. Best Buy, a
consumer appliance retailer, did very well during the early part of the
period. Sears and AnnTaylor, both among the fund's top 10 investments at
the end of February, showed consistently solid performances and achieved
their earnings goals. In addition, Old American Stores capitalized on its
strong presence in the craft supplies niche and appreciated by about 25%.
Q. WERE THERE ANY BIG DISAPPOINTMENTS?
A. There were a great number of stocks in the retail industry that lost
more than 25% of their value during the period. Fortunately, the fund
avoided most of the big losers, or "blow-ups" as they're called in the
trade. But yes, there were some big disappointments in the portfolio.
Burlington Coat Factory, for example, experienced a steep decline in its
stock price when it announced, late in the period, that its inventories
were too high and its earnings below expectations. Hechinger's, a lumber
and building materials company, also was a disappointment, though not of
the same magnitude, as its once-promising sales were hurt by increased
competition in that sector. The fund sold its positions in both of these
stocks during the period and protected itself from further declines.
Q. WHAT HAS BEEN THE STRATEGY IN MANAGING THE FUND DURING THIS UNFAVORABLE
RETAILING ENVIRONMENT?
A. As a general rule, the fund has tried to limit its exposure in sectors
where competitive pressures are greatest. This has meant staying away from
discount stores and warehouse clubs, for example, and focusing more on
certain specialty retailers where the market is more fragmented and there
is more room for growth in market share even when the overall environment
is so challenging. For instance, home improvement and consumer electronics
are groups that have been among the fund's top performers. Certain other
niche businesses, such as bath and linen retailers and pet supply stores,
also have supported this strategy.
Q. WHAT IS YOUR OUTLOOK FOR THE INDUSTRY AND HOW WILL IT AFFECT YOUR
STRATEGY GOING FORWARD?
A. I believe the retail environment will continue to be a challenging one.
There still is far too much capacity in the system - too many stores and
not enough evidence of industry consolidation - which will continue putting
intense competitive pressure on retailers and could hold back their
earnings. Also, I am not very optimistic about improvements on the demand
side, which generally means that it's a stock picker's market. I began
running the fund in February and expect to maintain the strategy it has
been following. I'll continue focusing on value stocks and on those
companies that are eliminating overhead or are able to fund their future
growth internally, without having to go to the market for capital.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1995, more than
$31 million
MANAGER: Erin Sullivan, since February 1995;
equity analyst, medical technology and
hospital supply industries, 1993-95; analyst,
initial public offerings, 1991-92; joined Fidelity
in 1991
(checkmark)
RETAILING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.6%
SHARES VALUE (NOTE 1)
APPAREL STORES - 12.9%
GENERAL APPAREL STORES - 4.9%
BON-TON Stores, Inc. (a) 41,700 $ 469,121 09776J10
Buckle, Inc. (The) (a) 11,000 159,500 11844010
Filene's Basement Corp. (a) 66,900 263,419 31686610
Gap, Inc. 13,000 422,500 36476010
Gymboree Corp. (a) 13,000 312,000 40377710
1,626,540
MISCELLANEOUS APPAREL, ACCESSORIES - 1.2%
Urban Outfitters, Inc. (a) 17,200 404,200 91704710
PROFESSIONAL & COMMERCIAL EQUIPMENT &
SUPPLY - WHOLESALE - 0.6%
Sportmart, Inc. Class A (non-vtg) (a) 30,000 202,500 84892220
WOMEN'S CLOTHING STORES - 6.2%
AnnTaylor Stores Corp. (a) 28,200 930,600 03611510
Cache, Inc. (a) 80,000 560,000 12715030
Talbots, Inc. 17,000 537,625 87416110
2,028,225
TOTAL APPAREL STORES 4,261,465
AUTOS, TIRES, & ACCESSORIES - 2.2%
AUTO PARTS - RETAIL - 2.2%
Autozone, Inc. (a) 27,850 738,025 05333210
DRUG STORES - 5.8%
Big B, Inc. 33,000 474,375 08889110
Eckerd Corp. (a) 13,900 364,875 27876310
Revco (D.S.), Inc. (a) 35,400 650,475 76133910
Rite Aid Corp. 18,000 445,500 76775410
1,935,225
GENERAL MERCHANDISE STORES - 19.6%
CONVENIENCE STORES - 1.2%
National Convenience Stores (a) 45,000 405,000 63557050
DEPARTMENT STORES - 10.6%
Carson Pirie Scott & Co. (a) 21,900 372,300 14590310
Federated Department Stores, Inc. (a) 16,000 352,000 31410H10
Sears, Roebuck & Co. 45,200 2,226,100 81238710
Stein Mart, Inc. (a) 30,000 333,750 85837510
Younkers, Inc. (a) 11,700 210,600 98776710
3,494,750
GENERAL MERCHANDISE STORES - 5.3%
Dayton Hudson Corp. 11,100 782,550 23975310
Dollar General Corp. 13,500 469,125 25666910
Price/Costco, Inc. (a) 36,100 491,863 74143W10
1,743,538
VARIETY STORES - 2.5%
Consolidated Stores Corp. (a) 25,000 475,000 21014910
Mac Frugals Bargains C/O, Inc. (a) 21,000 357,000 55415210
832,000
TOTAL GENERAL MERCHANDISE STORES 6,475,288
GROCERY STORES - 3.6%
GROCERY - RETAIL - 3.6%
Hannaford Brothers Co. 15,000 386,250 41055010
Kroger Co. (The) (a) 16,000 420,000 50104410
Safeway, Inc. (a) 10,700 383,863 78651420
1,190,113
SHARES VALUE (NOTE 1)
HOUSEHOLD PRODUCTS - 1.3%
COSMETICS - 1.3%
Alberto-Culver Co. Class A 17,000 $ 422,875 01306820
LEASING & RENTAL - 0.5%
EQUIPMENT RENTAL & LEASING, NEC - 0.5%
Renters Choice, Inc. (a) 11,000 167,750 76011410
LEISURE DURABLES & TOYS - 3.5%
BOAT DEALERS - RETAIL - 2.1%
West Marine, Inc. (a) 29,500 693,250 95423510
SPORTING & ATHLETIC GOODS - 1.4%
Leslie's Poolmart 32,670 453,296 52706910
TOTAL LEISURE DURABLES & TOYS 1,146,546
RETAIL & WHOLESALE, MISCELLANEOUS - 39.4%
BUILDING MATERIALS - RETAIL - 2.6%
Home Depot, Inc. (The) 19,500 875,063 43707610
DURABLE GOODS - WHOLESALE - 1.4%
Waban, Inc. (a) 23,100 456,225 92939410
JEWELRY STORES - 2.5%
Friedmans, Inc. Class A (a) 44,100 837,900 35843810
LUMBER & BUILDING MATERIALS - RETAIL - 5.6%
Hechinger Co. Class A 35,000 404,688 42266020
Lowe's Companies, Inc. 28,300 951,588 54866110
Wickes Lumber Co. (a) 31,500 480,375 96744610
1,836,651
MAIL ORDER - 1.5%
Land's End, Inc. (a) 30,500 507,063 51508610
MUSIC, TV, & ELECTRONIC STORES - 6.1%
Best Buy Co., Inc. (a) 10,770 232,901 08651610
Campo Electronics Appliances and
Computers, Inc. (a) 20,500 194,750 13462410
Circuit City Stores, Inc. 44,600 964,475 17273710
InterTan, Inc. (a) 44,500 328,188 46112010
Rex Stores Corp. (a) 24,600 310,575 76162410
2,030,889
PAINT, VARNISH & SUPPLIES - WHOLESALE - 1.3%
Finish Line, Inc. Class A (a) 66,600 424,575 31792310
RETAIL, GENERAL - 16.1%
Bed Bath & Beyond, Inc. (a) 21,500 521,375 07589610
Officemax, Inc. (a) 16,000 400,000 67622M10
Office Depot, Inc. (a) 15,650 365,819 67622010
Old American Stores, Inc. (a) 145,000 2,247,500 67950310
Petco Animal Supplies, Inc. (a) 22,000 412,500 71601610
Pier 1 Imports, Inc. 52,000 513,500 72027910
Sunglass Hut International, Inc. (a) 32,000 876,000 86736F10
5,336,694
SEWING STORES - 1.3%
Fabri-Centers of America, Inc. (a) 25,000 425,000 30284610
SPORTING GOODS & BIKES STORES - 1.0%
Forzani Group Ltd. Class A (a) 60,300 314,616 34990710
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 13,044,676
SERVICES - 1.1%
GENERAL SERVICES - 1.1%
Regis Corp. (a) 20,400 367,200 75893210
TEXTILES & APPAREL - 2.7%
APPAREL - 1.3%
Fila Holding Spa sponsored ADR 19,600 426,300 31685010
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - CONTINUED
FOOTWEAR - 1.4%
Nine West Group, Inc. (a) 16,300 $ 458,438 65440D10
TOTAL TEXTILES & APPAREL 884,738
TOTAL COMMON STOCKS
(Cost $31,566,425) 30,633,901
REPURCHASE AGREEMENTS - 7.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $2,453,414 2,453,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $34,019,425) $ 33,086,901
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $252,110,602 and $249,755,581, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $163,684 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $328,188 and $356,000, respectively (see Note 7 of
Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $23,218,000 and $4,482,786,
respectively. The weighted average interest rate paid was 4.6% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $34,163,978. Net unrealized depreciation aggregated
$1,077,077, of which $1,448,253 related to appreciated investment
securities and $2,525,330 related to depreciated investment securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $3,094,000 which will expire on February 28, 2003.
RETAILING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $2,453,000) (cost $34,019,425) - See $ 33,086,901
accompanying schedule
Cash 695
Receivable for fund shares sold 12,225
Dividends receivable 24,197
Redemption fees receivable 146
Other receivables 5,795
TOTAL ASSETS 33,129,959
LIABILITIES
Payable for fund shares redeemed $ 724,426
Accrued management fee 16,928
Other payables and accrued expenses 942,148
Collateral on securities loaned, 356,000
at value
TOTAL LIABILITIES 2,039,502
NET ASSETS $ 31,090,457
Net Assets consist of:
Paid in capital $ 35,284,826
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (3,261,845
)
Net unrealized appreciation (depreciation) on investments (932,524
)
NET ASSETS, for 1,300,473 $ 31,090,457
shares outstanding
NET ASSET VALUE and redemption price per share ($31,090,457 (divided by) 1,300,473 shares) $23.91
Maximum offering price per share (100/97.00 of $23.91) $24.65
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 461,929
Dividends
Interest (including security lending fees of $30,256) 283,233
TOTAL INCOME 745,162
EXPENSES
Management fee $ 377,628
Transfer agent 780,357
Fees
Redemption fees (92,842
)
Accounting and security lending fees 67,016
Non-interested trustees' compensation 1,037
Custodian fees and expenses 26,214
Registration fees 58,439
Audit 22,784
Legal 1,260
Interest 10,243
Reports to shareholders 4,204
Miscellaneous 443
Total expenses before reductions 1,256,783
Expense reductions (63,543 1,193,240
)
NET INVESTMENT INCOME (LOSS) (448,078
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (3,125,762
)
Foreign currency transactions (168 (3,125,930
) )
Change in net unrealized appreciation (depreciation) on investment securities (4,256,876
)
NET GAIN (LOSS) (7,382,806
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (7,830,884
)
OTHER INFORMATION $307,005
Sales Charges Paid to FDC
Deferred sales charges withheld $2,778
by FDC
Exchange fees withheld by FSC $65,258
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (448,078 $ (499,992
Net investment income (loss) ) )
Net realized gain (loss) (3,125,930 8,382,130
)
Change in net unrealized appreciation (depreciation) (4,256,876 (727,175
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (7,830,884 7,154,963
)
Distributions to shareholders from net realized gains - (7,142,724
)
Share transactions 159,368,155 83,392,727
Net proceeds from sales of shares
Reinvestment of distributions - 7,020,042
Cost of shares redeemed (173,586,110 (112,598,899
) )
Paid in capital portion of redemption fees 349,164 86,108
Net increase (decrease) in net assets resulting from share transactions (13,868,791 (22,100,022
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (21,699,675 (22,087,783
) )
NET ASSETS
Beginning of period 52,790,132 74,877,915
End of period $ 31,090,457 $ 52,790,132
OTHER INFORMATION
Shares
Sold 6,306,112 3,246,217
Issued in reinvestment of distributions - 282,598
Redeemed (7,124,678 (4,546,561
) )
Net increase (decrease) (818,566 (1,017,746
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 24.91 $ 23.87 $ 22.13 $ 17.42 $ 13.94
Income from Investment Operations
Net investment income (loss) (.18) (.22) (.08) (.03) (.05)
Net realized and unrealized gain (loss) (.96) 3.85 2.93 5.09 3.43
Total from investment operations (1.14) 3.63 2.85 5.06 3.38
Less Distributions
From net realized gain - (2.63) (1.17) (.50) (.03)
Redemption fees added to paid in capital .14 .04 .06 .15 .13
Net asset value, end of period $ 23.91 $ 24.91 $ 23.87 $ 22.13 $ 17.42
TOTAL RETURN B, C (4.01)% 15.61% 13.72% 30.28% 25.26%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 31,090 $ 52,790 $ 74,878 $ 48,441 $ 18,069
Ratio of expenses to average net assets 1.96% 1.83% 1.77% A 1.87% 2.54%
Ratio of expenses to average net assets before expense reductions 2.07% 1.86% 1.77% A 1.87% 2.87%
Ratio of net investment income (loss) to average net assets (.74)% (.87)% (.44)% (.13)% (.34)%
A
Portfolio turnover rate 481% 154% 171% A 205% 115%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
AIR TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
AIR TRANSPORTATION -12.45% 46.74% 91.85%
AIR TRANSPORTATION
(INCL. 3% SALES CHARGE) -15.08% 42.34% 86.09%
S&P 500 7.36% 71.20% 212.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 16, 1985. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
AIR TRANSPORTATION -12.45% 7.97% 7.33%
AIR TRANSPORTATION
(INCL. 3% SALES CHARGE) -15.08% 7.32% 6.98%
S&P 500 7.36% 11.35% 13.18%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Air TransportStandard & Poor's 50
12/16/85 9700.00 10000.00
12/31/85 9215.00 10080.42
01/31/86 9961.90 10136.87
02/28/86 10553.60 10895.11
03/31/86 10573.00 11503.06
04/30/86 10388.70 11373.07
05/31/86 10408.10 11978.12
06/30/86 9826.10 12180.55
07/31/86 9234.40 11499.66
08/31/86 9486.60 12352.93
09/30/86 9680.60 11331.35
10/31/86 10194.70 11985.16
11/30/86 10320.80 12276.40
12/31/86 10485.70 11963.36
01/31/87 11426.60 13574.82
02/28/87 11911.60 14111.03
03/31/87 11504.20 14518.83
04/30/87 11513.90 14389.62
05/31/87 12202.60 14514.81
06/30/87 12357.80 15247.80
07/31/87 12629.40 16020.87
08/31/87 12736.10 16618.45
09/30/87 12270.50 16254.50
10/31/87 8565.10 12753.28
11/30/87 7983.10 11702.41
12/31/87 8319.92 12592.97
01/31/88 8552.87 13123.13
02/29/88 9262.84 13734.67
03/31/88 9662.19 13310.27
04/30/88 9551.26 13458.01
05/31/88 9407.05 13575.09
06/30/88 10616.21 14198.19
07/31/88 10305.60 14144.24
08/31/88 9728.75 13663.33
09/30/88 10372.16 14245.39
10/31/88 10571.84 14641.41
11/30/88 10327.79 14432.04
12/31/88 10738.24 14684.60
01/31/89 11736.63 15759.52
02/28/89 11958.49 15367.10
03/31/89 12557.53 15725.16
04/30/89 13056.72 16541.29
05/31/89 13389.52 17211.21
06/30/89 13322.59 17113.11
07/31/89 14260.64 18658.42
08/31/89 15343.87 19024.13
09/30/89 14740.84 18946.13
10/31/89 13579.44 18506.58
11/30/89 13445.43 18884.12
12/31/89 13565.93 19337.33
01/31/90 12169.78 18039.80
02/28/90 12681.70 18272.51
03/31/90 13344.87 18756.73
04/30/90 12856.22 18287.82
05/31/90 13752.09 20070.88
06/30/90 13786.99 19934.40
07/31/90 13368.14 19870.61
08/31/90 11250.65 18074.30
09/30/90 10122.09 17194.08
10/31/90 10657.28 17120.15
11/30/90 10494.40 18226.11
12/31/90 11099.40 18734.62
01/31/91 12414.11 19551.45
02/28/91 13810.26 20949.38
03/31/91 13752.09 21456.35
04/30/91 13414.68 21507.85
05/31/91 14205.83 22436.99
06/30/91 13906.29 21409.37
07/31/91 14333.81 22407.05
08/31/91 14155.68 22938.10
09/30/91 13680.66 22555.03
10/31/91 14345.69 22857.27
11/30/91 13704.41 21936.12
12/31/91 15212.61 24445.61
01/31/92 16091.40 23990.92
02/29/92 16815.81 24302.81
03/31/92 15830.13 23828.90
04/30/92 15010.72 24529.47
05/31/92 15212.61 24649.67
06/30/92 14718.62 24282.39
07/31/92 14634.03 25275.53
08/31/92 14017.73 24757.39
09/30/92 14476.93 25049.52
10/31/92 14996.55 25137.20
11/30/92 15359.08 25994.38
12/31/92 16211.75 26314.11
01/31/93 16358.35 26535.14
02/28/93 16614.90 26896.02
03/31/93 18447.43 27463.53
04/30/93 18655.96 26798.91
05/31/93 19721.66 27517.12
06/30/93 18251.73 27596.92
07/31/93 18876.45 27486.53
08/31/93 20003.40 28528.27
09/30/93 19599.17 28308.61
10/31/93 20726.12 28894.59
11/30/93 20775.12 28620.10
12/31/93 21219.10 28966.40
01/31/94 22038.56 29951.26
02/28/94 21256.35 29139.58
03/31/94 20027.15 27869.09
04/30/94 19895.44 28225.82
05/31/94 19063.72 28688.72
06/30/94 18482.83 27985.85
07/31/94 19446.58 28903.78
08/31/94 20185.89 30088.84
09/30/94 17928.34 29351.66
10/31/94 18073.57 30012.07
11/30/94 16872.18 28919.03
12/31/94 16605.31 29347.90
01/31/95 17139.67 30108.89
02/28/95 18609.17 31282.24
Let's say you invested $10,000 in Fidelity Select Air Transportation
Portfolio on December 16, 1985, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $18,609 -
a 86.09% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $31,282 over the same period - a 212.82% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Northwest Airlines Corp. Class A 9.0
AMR Corp. 8.4
KLM Royal Dutch Airlines 7.5
Lufthansa 6.2
Delta Air Lines, Inc. 5.3
British Airways PLC ADR 4.5
Kobenhaven Lufthave AS 4.5
McDonnell Douglas Corp. 3.8
Bombardier, Inc. Class B 3.8
Pittston Company Services Group 3.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 20.2
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 3.8
Row: 1, Col: 4, Value: 4.4
Row: 1, Col: 5, Value: 7.4
Row: 1, Col: 6, Value: 60.4
Air Transportation,
Major National 60.4%
Conglomerates 7.4%
Airports & Terminal Services 4.4%
Aircraft 3.8%
Railroad Equipment 3.8%
All Others 20.2%*
* INCLUDES SHORT-TERM INVESTMENTS
AIR TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Jason Weiner,
Portfolio Manager of
Fidelity Select
Air Transportation Portfolio
Q. JASON, HOW DID THE FUND PERFORM?
A. The fund encountered problems, although it has rebounded somewhat during
January and February. Its total return for the year ended February 28, 1995
was -12.45%. That trailed the S&P 500, which returned 7.36% during the same
period.
Q. WHAT CAUSED THE FUND'S DIFFICULTIES?
A. Most domestic airlines, including regional and major carriers, were
under pressure from eroding ticket prices. Low-cost carriers such as
Continental Lite, USAir and America West expanded the number of inexpensive
seats available, and airlines had to reduce their regular fares to compete.
As a result, industry revenues were flat even though the economy was
growing at a rapid pace, and share prices declined sharply. Since December,
however, airline stocks have rebounded significantly. That isn't
surprising. In fact, the sector has staged similar winter rallies during 14
of the past 15 years.
Q. WHAT KIND OF INVESTMENTS SUFFERED THE MOST?
A. The fund had a significant stake in Continental, which experienced
difficulties when it expanded Continental Lite. The fund also held shares
of Southwest Airlines, which opened new routes in too many cities at a time
when demand wasn't growing rapidly enough to support such expansion.
Q. SINCE YOU TOOK OVER THE FUND ON DECEMBER 1, HAVE YOU MADE MAJOR CHANGES?
A. Yes. I have given the fund a more international flavor. Overseas
holdings now amount to about half of the fund's total investments. I have
purchased stocks of European carriers mainly for two reasons. First, those
economies are in earlier stages of recovery, which should boost air travel.
Second, carriers such as KLM, Lufthansa and British Airways have reduced
their costs sharply.
Q. WHAT KIND OF DOMESTIC CARRIERS DID YOU INVEST IN?
A. I shifted the fund's assets toward domestic carriers with exposure to
strong international markets. Air traffic over the Atlantic should increase
as European economies recover. Meanwhile, carriers such as Delta, TWA and
USAir are reducing their capacity on those routes. The combination of
higher demand and lower capacity should support fares, which will benefit
companies with strong Atlantic routes, such as American Airlines and
Northwest.
Q. AREN'T THOSE DOMESTIC AIRLINES VULNERABLE TO CONTINUED FARE WARS IN THIS
COUNTRY?
A. Among U.S. companies, I am investing the fund in carriers that are
limiting their exposure to strong competition from the low-cost carriers
that serve short-haul markets. For example, I invested the fund in shares
of Northwest, which has U.S. hubs in Detroit and Minneapolis, where there
is little low-cost competition. Northwest only flies in 10 of the top 100
short-haul markets, and those markets account for only 5% of its revenues.
By contrast, USAir gets 35% of its revenues from these short-haul markets,
so it competes much more with low-cost carriers. American Airlines also has
been moving out of domestic markets with the fiercest price competition. I
also have invested the fund in ValuJet, which boasts the lowest costs in
the industry.
Q. DO YOU LIKE SHARES OF ANY REGIONAL AIRLINES?
A. No. The regionals are quite vulnerable to low-cost competition. They
also have suffered from safety concerns. Hence, they have had more problems
than even the average airline.
Q. WHAT'S THE OUTLOOK FOR THE SECTOR?
A. That depends upon a number of factors, including fuel prices. There is
also the potential for labor problems, although they aren't an immediate
concern. Meanwhile, carriers with strong international exposure should
continue to have growth potential. In addition to the Atlantic, I'm very
optimistic about Latin America, where economic growth should stimulate air
travel and stringent capacity controls exist. So far, the problems in
Mexico have not had a noticeable impact on traffic flows to other Latin
American countries. I also have hopes that traffic in the Pacific will
improve as the Japanese economy recovers. And there is the possibility that
the domestic market will improve, although I'm not counting on it. For now,
I will continue to invest mostly in overseas carriers or U.S. firms that
can benefit from growth in international markets.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1995, more than
$18 million
MANAGER: Jason Weiner, since December
1994; equity analyst, biotechnology,
technology and retail products industries,
1993-1994; retail office products since
December 1994; joined Fidelity in 1991
(checkmark)
AIR TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 4.3%
AIRCRAFT - 3.8%
McDonnell Douglas Corp. 12,700 $ 711,197 58016910
TRAINING EQUIPMENT & SIMULATORS - 0.5%
Flightsafety International, Inc. 2,200 97,625 33942310
TOTAL AEROSPACE & DEFENSE 808,822
AIR TRANSPORTATION - 65.6%
AIR TRANSPORTION, MAJOR NATIONAL - 57.5%
AMR Corp. (a) 25,850 1,580,081 00176510
Aerovias De Mexico SA de CV sponsored
ADR representing B shares (a) (b) 15,400 6,930 00806510
Air Canada, Inc. (a) 122,600 661,725 00891110
British Airways PLC ADR. 13,500 837,000 11041930
Braathens Safe (a) 2,400 88,984 11299722
Delta Air Lines, Inc. 17,200 997,600 24736110
Finnair OY 75,000 560,602 31799S22
Japan Airlines Co. Ltd. 25,000 153,739 47103420
KLM Royal Dutch Airlines (a) 47,700 1,395,225 48251610
Lufthansa (a) 8,500 1,164,702 54976510
Northwest Airlines Corp. Class A (a) 68,100 1,676,963 66728010
Pan Am Corp. (a) 5,900 15 69775710
Singapore International Airlines 40,000 400,414 82868910
UAL Corp. 7,100 672,725 90254950
ValuJet Airlines (a) 19,300 557,288 92047Q10
10,753,993
AIR TRANSPORTATION, REGIONAL - 3.7%
Comair Holdings, Inc. 50 838 19978910
Pittston Company Services Group 27,500 687,500 72570110
688,338
AIRPORTS & TERMINAL SERVICES - 4.4%
Kobenhaven Lufthave AS 14,000 835,275 49999B22
TOTAL AIR TRANSPORTATION 12,277,606
AUTOS, TIRES, & ACCESSORIES - 2.4%
PETROLEUM - WHOLESALE - 2.4%
Mercury Air Group 51,000 452,625 58935410
CONGLOMERATES - 7.4%
Allied-Signal, Inc. 12,400 471,200 01951210
Dial Corp. (The) 5,000 125,000 25247010
Textron, Inc. 6,000 328,500 88320310
United Technologies Corp. 7,000 464,625 91301710
1,389,325
OIL & GAS - 0.0%
OIL & GAS EXPLORATION - 0.0%
British Petroleum PLC ADR 23 1,760 11088940
RAILROADS - 3.8%
RAILROAD EQUIPMENT - 3.8%
Bombardier, Inc. Class B 37,000 708,953 09775120
RETAIL & WHOLESALE, MISCELLANEOUS - 2.0%
RETAIL, GENERAL - 2.0%
Officemax, Inc. (a) 14,000 350,000 67622M10
Staples, Inc. (a) 700 16,975 85503010
366,975
TRUCKING & FREIGHT - 2.8%
AIR COURIER SERVICES - 2.8%
Airborne Freight Corp. 21,700 518,088 00926610
TOTAL COMMON STOCKS
(Cost $15,837,568) 16,524,154
CORPORATE BONDS - 2.9%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
CONVERTIBLE BONDS - 2.4%
AIR TRANSPORTATION - 2.4%
AIR TRANSPORTION, MAJOR NATIONAL - 2.4%
Delta Air Lines, Inc. 3.23%,
6/15/03 $ 570,000 $ 443,175 247361YA
NONCONVERTIBLE BONDS - 0.5%
AIR TRANSPORTATION - 0.5%
AIR TRANSPORTION, MAJOR NATIONAL - 0.5%
AMR Corp. 9 1/2%, 7/15/98 100,000 103,008 001765AN
TOTAL CORPORATE BONDS
(Cost $481,530) 546,183
REPURCHASE AGREEMENTS - 8.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $1,638,277 1,638,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $17,957,098) $ 18,708,337
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $6,930 or .04% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $24,300,088 and $18,370,480, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $11,905 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,349,000 and $1,207,000,
respectively. The weighted average interest rate paid was 3.8% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 63.6%
Netherlands 7.5
Canada 7.3
Germany 6.2
United Kingdom 4.5
Denmark 4.5
Finland 3.0
Singapore 2.1
Others (individually less than 1%) 1.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $18,073,955. Net unrealized appreciation aggregated
$634,382, of which $1,171,099 related to appreciated investment securities
and $536,717 related to depreciated investment securities.
The fund hereby designates $62,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its fiscal year ending February 28, 1996
$998,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
AIR TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $1,638,000) (cost $17,957,098) - See $ 18,708,337
accompanying schedule
Cash 265
Receivable for investments sold 499,441
Receivable for fund shares sold 3,562,231
Dividends receivable 6,811
Interest receivable 5,023
Redemption fees receivable 23
Other receivables 225
Receivable from investment adviser for expense reductions 780
TOTAL ASSETS 22,783,136
LIABILITIES
Payable for investments purchased $ 3,727,063
Payable for fund shares redeemed 390,849
Accrued management fee 6,909
Other payables and accrued expenses 25,584
TOTAL LIABILITIES 4,150,405
NET ASSETS $ 18,632,731
Net Assets consist of:
Paid in capital $ 18,978,669
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (1,097,177
)
Net unrealized appreciation (depreciation) on investments 751,239
NET ASSETS, for 1,337,455 shares outstanding $ 18,632,731
NET ASSET VALUE and redemption price per share ($18,632,731 (divided by) 1,337,455 shares) $13.93
Maximum offering price per share (100/97.00 of $13.93) $14.36
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 59,583
Dividends
Interest 53,295
TOTAL INCOME 112,878
EXPENSES
Management fee $ 58,574
Transfer agent 134,833
Fees
Redemption fees (14,903
)
Accounting fees and expenses 45,044
Non-interested trustees' compensation 201
Custodian fees and expenses 12,584
Registration fees 13,472
Audit 20,506
Legal 231
Interest 251
Reports to shareholders 1,067
Miscellaneous 99
Total expenses before reductions 271,959
Expense reductions (35,969 235,990
)
NET INVESTMENT INCOME (LOSS) (123,112
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (856,145
)
Foreign currency transactions 64 (856,081
)
Change in net unrealized appreciation (depreciation) on investment securities 121,242
NET GAIN (LOSS) (734,839
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (857,951
)
OTHER INFORMATION $105,357
Sales Charges Paid to FDC
Deferred sales charges withheld $1,000
by FDC
Exchange fees withheld by FSC $14,783
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
Operations $ (123,112 $ (198,334
Net investment income (loss) ) )
Net realized gain (loss) (856,081 2,844,048
)
Change in net unrealized appreciation (depreciation) 121,242 638,748
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (857,951 3,284,462
)
Distributions to shareholders (527,219 (252,463
From net realized gain ) )
In excess of net realized gain (98,627 (52,807
) )
TOTAL DISTRIBUTIONS (625,846 (305,270
) )
Share transactions 30,972,770 74,183,528
Net proceeds from sales of shares
Reinvestment of distributions 593,907 292,761
Cost of shares redeemed (22,544,984 (78,501,131
) )
Paid in capital portion of redemption fees 60,093 212,184
Net increase (decrease) in net assets resulting from share transactions 9,081,786 (3,812,658
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 7,597,989 (833,466
)
NET ASSETS
Beginning of period 11,034,742 11,868,208
End of period 18,632,731 11,034,742
OTHER INFORMATION
Shares
Sold 2,243,732 4,831,385
Issued in reinvestment of distributions 41,090 17,788
Redeemed (1,592,005 (5,077,239
) )
Net increase (decrease) 692,817 (228,066
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.12 $ 13.60 $ 12.64 $ 11.53 $ 11.05
Income from Investment Operations
Net investment income (loss) (.18) (.18) (.09) E (.13) (.04)
Net realized and unrealized gain (loss) (2.01) 3.78 1.33 1.40 .38
Total from investment operations (2.19) 3.60 1.24 1.27 .34
Less Distributions
From net realized gain (.92) (.22) (.36) (.25) -
In excess of net realized gain (.17) (.05) - - -
Total distributions (1.09) (.27) (.36) (.25) -
Redemption fees added to paid in capital .09 .19 .08 .09 .14
Net asset value, end of period $ 13.93 $ 17.12 $ 13.60 $ 12.64 $ 11.53
TOTAL RETURN B, C (12.45)% 27.94% 10.69% 11.90% 4.34%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 18,633 $ 11,035 $ 11,868 $ 6,971 $ 4,372
Ratio of expenses to average net assets 2.50% 2.31% 2.48% A 2.51% 2.48%
Ratio of expenses to average net assets before expense reductions 2.88% 2.33% 2.64% A 3.06% 3.03%
Ratio of net investment income (loss) to average net assets (1.31)% (1.11)% (.90)% (1.04)% (.34)%
A
Portfolio turnover rate 200% 171% 96% A 261% 106%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME (LOSS) PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.01 PER SHARE.
AUTOMOTIVE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
AUTOMOTIVE -12.59% 119.02% 181.58%
AUTOMOTIVE
(INCL. 3% SALES CHARGE) -15.21% 112.45% 173.13%
S&P 500 7.36% 71.20% 158.12%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 30, 1986. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
AUTOMOTIVE -12.59% 16.98% 12.68%
AUTOMOTIVE
(INCL. 3% SALES CHARGE) -15.21% 16.27% 12.28%
S&P 500 7.36% 11.35% 11.55%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Automotive (5Standard & Poor's 50
06/30/86 9700.00 10000.00
07/31/86 9176.20 9488.77
08/31/86 9603.00 10192.84
09/30/86 8943.40 9349.89
10/31/86 9399.30 9889.38
11/30/86 9506.00 10129.69
12/31/86 9341.10 9871.39
01/31/87 10747.60 11201.06
02/28/87 11707.90 11643.50
03/31/87 12028.00 11980.00
04/30/87 12202.60 11873.38
05/31/87 12183.20 11976.68
06/30/87 12367.50 12581.50
07/31/87 13230.80 13219.38
08/31/87 13744.90 13712.46
09/30/87 13541.20 13412.16
10/31/87 9476.90 10523.18
11/30/87 9098.60 9656.07
12/31/87 9952.20 10390.90
01/31/88 10402.71 10828.35
02/29/88 11068.24 11332.96
03/31/88 11866.87 10982.77
04/30/88 12071.65 11104.68
05/31/88 12030.70 11201.29
06/30/88 12726.94 11715.43
07/31/88 12583.60 11670.91
08/31/88 11999.98 11274.10
09/30/88 12051.17 11754.37
10/31/88 11959.02 12081.14
11/30/88 11703.05 11908.38
12/31/88 11948.78 12116.78
01/31/89 12501.68 13003.73
02/28/89 12368.58 12679.94
03/31/89 12604.07 12975.38
04/30/89 13167.21 13648.80
05/31/89 13361.75 14201.58
06/30/89 13126.26 14120.63
07/31/89 13587.01 15395.72
08/31/89 13720.11 15697.48
09/30/89 13402.71 15633.12
10/31/89 12286.67 15270.43
11/30/89 12399.30 15581.95
12/31/89 12438.82 15955.91
01/31/90 12110.37 14885.27
02/28/90 12470.61 15077.29
03/31/90 12936.80 15476.84
04/30/90 12894.42 15089.92
05/31/90 13625.49 16561.19
06/30/90 13869.48 16448.57
07/31/90 13912.46 16395.93
08/31/90 11914.22 14913.74
09/30/90 10775.44 14187.44
10/31/90 10560.58 14126.44
11/30/90 11183.68 15039.00
12/31/90 11602.67 15458.59
01/31/91 12258.00 16132.59
02/28/91 13257.12 17286.07
03/31/91 13364.55 17704.39
04/30/91 13514.96 17746.88
05/31/91 14600.02 18513.55
06/30/91 14567.79 17665.63
07/31/91 15169.41 18488.84
08/31/91 15663.60 18927.03
09/30/91 15201.64 18610.95
10/31/91 15599.14 18860.33
11/30/91 14825.63 18100.26
12/31/91 15933.39 20170.93
01/31/92 17654.69 19795.75
02/29/92 19432.62 20053.10
03/31/92 19851.62 19662.06
04/30/92 21119.95 20240.13
05/31/92 21108.63 20339.30
06/30/92 20983.03 20036.25
07/31/92 21175.85 20855.73
08/31/92 19860.16 20428.19
09/30/92 19531.23 20669.24
10/31/92 20347.87 20741.58
11/30/92 21334.64 21448.87
12/31/92 22564.00 21712.69
01/31/93 23605.95 21895.08
02/28/93 23953.27 22192.85
03/31/93 25238.34 22661.12
04/30/93 25092.52 22112.72
05/31/93 26620.51 22705.34
06/30/93 27086.07 22771.19
07/31/93 27396.45 22680.10
08/31/93 28351.44 23539.68
09/30/93 28649.88 23358.43
10/31/93 29258.69 23841.94
11/30/93 29258.69 23615.45
12/31/93 30548.18 23901.19
01/31/94 32289.58 24713.83
02/28/94 31247.19 24044.09
03/31/94 29052.04 22995.77
04/30/94 28461.30 23290.11
05/31/94 28039.66 23672.07
06/30/94 27680.01 23092.10
07/31/94 28510.91 23849.53
08/31/94 28039.66 24827.36
09/30/94 26849.12 24219.09
10/31/94 27357.58 24764.01
11/30/94 25708.19 23862.11
12/31/94 26652.41 24215.98
01/31/95 26019.14 24843.91
02/28/95 27313.21 25812.07
Let's say you invested $10,000 in Select Automotive Portfolio on June 30,
1986, when the fund started, and paid a 3% sales charge. By February 28,
1995, your investment would have grown to $27,313 - a 173.13% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$25,812 over the same period - a 158.12% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Echlin, Inc. 9.9
Magna International, Inc. Class A 8.7
Dana Corp. 6.3
Genuine Parts Co. 6.1
Bandag, Inc. 5.8
Cooper Tire & Rubber Co. 5.1
Smith (A.O.) Corp. Class B 5.0
Danaher Corp. 5.0
General Motors Corp. 4.2
Volvo Aktiebolaget Class B 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Durables 80.8%
Industrial Machinery &
Equment 8.4%
Autos & Truck Parts 49.4%
Motor Vehicles &
Car Bodies 17.0%
Tires & Inner Tubes 10.9%
Auto Parts - Retail 8.7%
Autos & Other Motor
Vehicles 6.1%
All Others 7.9%
Row: 1, Col: 1, Value: 7.9
Row: 1, Col: 2, Value: 6.1
Row: 1, Col: 3, Value: 8.699999999999999
Row: 1, Col: 4, Value: 10.9
Row: 1, Col: 5, Value: 17.0
Row: 1, Col: 6, Value: 49.4
AUTOMOTIVE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Brenda Reed,
Portfolio Manager of Fidelity Select Automotive Portfolio
Q. BRENDA, HOW DID THE FUND PERFORM?
A. I'm afraid it was a disappointing year for automotive stocks. The fund's
total return for the 12 months ended February 28, 1995, was -12.59%, which
compares with a 7.36% return for the S&P 500.
Q. WHAT CAUSED THE FUND TO LAG THE MARKET BY SUCH A MARGIN?
A. Fear and uncertainty about the direction of the economy and interest
rates are the story here. Automotive stocks, particularly the Big Three
domestic manufacturers - General Motors, Ford and Chrysler - peaked within
a few days of the Federal Reserve's first interest rate hike in early 1994.
As rates continued rising, investors worried that consumers would stop
buying cars. And from there, automotive-related stocks continued to
underperform.
Q. BUT THE BIG THREE HAD RECORD EARNINGS IN 1994 . . .
A. That's right. The Big Three, and many others in the industry, met or
exceeded earnings estimates. GM, Ford and Chrysler each had huge years.
Their earnings were great and their cash flows were strong, allowing them
to fund pension liabilities and clean up their balance sheets. But their
stock prices still took big hits as investors made a mass exodus from the
industry based on their view of impending changes in the business cycle.
Q. DID THE MARKET OVERREACT?
A. The industry is cyclical; it does tend to rise and fall with the
economy, and there typically is an inverse correlation between interest
rates and automotive stock prices. But it's also true that earnings growth
tends to drive stock prices over time. So what's most surprising to me is
that stock prices dropped as sharply as they did when earnings came through
so strong and while there was evidence of continuing consumer demand.
Q. HOW DID YOU POSITION THE FUND TO COMPENSATE FOR THE SELL-OFF, AND WERE
THERE ANY BRIGHT SPOTS ALONG THE WAY?
A. It was a pretty tough year across the board. The auto manufacturers'
stocks did poorly, and to a certain extent, so did the original equipment
parts suppliers, despite the fact that the manufacturers have been
outsourcing a lot of their original parts contracts to these suppliers.
There were, however, two areas of relative strength in the portfolio that
helped break the fall; parts retailers and after-market suppliers both did
well. AutoZone and Pep Boys, which sell to the do-it-yourself market, both
performed fairly well, as did Genuine Parts, which sells mostly to
mechanics. Echlin, the fund's largest holding at the end of the period, was
also up for the year based on solid demand for after-market repair
products. Given the comparative strength of these holdings, I increased the
fund's positions there.
Q. DO YOU SEE ANY ENCOURAGING SIGNS FOR THE AUTO
MANUFACTURERS?
A. The bullish case is that if the economy continues to grow, there will be
pent-up demand for autos from the last recession, and if interest rates
don't rise significantly, demand should remain relatively strong. The flip
side is that if the economy slips into recession, consumer demand is sure
to fall. In terms of fundamentals, I think there are encouraging signs at
General Motors. Its management restructuring, cost-cutting initiatives and
product re-designs should lift its competitive prospects; its large and
profitable presence in Europe and Latin America should continue to help
drive earnings; and I think its non-automotive businesses are undervalued.
I've recently re-established the fund's GM position, and the stock did
pretty well late in the period. In Europe, where auto stocks have been
relatively flat over the past six months, Volvo could begin benefiting from
extra cash received from selling off some of its diversified holdings, and
Fiat, which I bought in the second half of the period, has become more
competitive in the European markets as a result of the lira's devaluation.
Conversely, the current strength of the yen versus the dollar makes the
Japanese manufacturers a less attractive play.
Q. WHAT IS YOUR OUTLOOK AND GAME PLAN GOING FORWARD?
A. It comes down to what the economy does from here. If the economy
stabilizes at a slow growth rate, the Big Three and original equipment
parts suppliers could do well over the next couple of years. If we move
into recession, I don't see much impetus for auto stocks to appreciate. My
strategy at the moment is to maintain a defensive positioning, emphasizing
the parts retailers and after-market suppliers, until there's a stronger
indication of domestic economic stability. In the longer term, however, I
think the industry is in a very healthy position for future growth.
FUND FACTS
START DATE: June 30, 1986
SIZE: as February 28, 1995, more than
$60 million
MANAGER: Brenda Reed, since May 1994;
manager, Fidelity Select Air Transportation
Portfolio, 1992-1994; joined Fidelity in 1992
(checkmark)
AUTOMOTIVE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 100%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 94.5%
AUTO & TRUCK PARTS - 49.4%
Automotive Industries Holding, Inc. (a) 84,000 $ 1,648,500 05329E10
Dana Corp. 151,800 3,738,075 23581110
Danaher Corp. 100,000 2,950,000 23585110
Donnelly Corp. Class A 33,000 577,500 25787010
Echlin, Inc. 170,000 5,886,250 27874910
Federal-Mogul Corp. 35,000 682,500 31354910
Gentex Corp. (a) 63,000 1,417,500 37190110
Johnson Controls, Inc. 22,700 1,129,325 47836610
Lear Seating Corp. 60,000 1,252,500 52189310
Magna International, Inc. Class A 133,500 5,139,973 55922240
Masland Corp. 20,000 287,500 57480610
Smith (A.O.) Corp. Class B 136,600 2,988,125 83186520
Superior Industries International, Inc. 30,040 818,590 86816810
Tower Automotive (a) 92,500 745,781 89170710
29,262,119
AUTO PARTS - RETAIL - 8.7%
AutoZone, Inc. (a) 73,100 1,937,150 05333210
Monro Muffler Brake, Inc. 100,410 1,757,175 61023610
Pep Boys-Manny, Moe & Jack 45,000 1,473,750 71327810
5,168,075
AUTOS & OTHER MOTOR VEHICLES - 6.1%
Genuine Parts Co. 93,200 3,623,150 37246010
MOTOR VEHICLE SUPPLIES & NEW PARTS - 2.4%
APS Holding Corp. Class A (a) 49,000 1,433,250 00193710
MOTOR VEHICLES & CAR BODIES - 17.0%
BMW AG 1,000 518,025 05528310
Chrysler Corp. 40,100 1,744,350 17119610
Fiat Spa (a) 125,000 480,550 31562110
Fiat Spa ADR (a) 30,000 573,750 31562160
Ford Motor Co. 30,000 783,750 34537010
General Motors Corp. 58,078 2,475,575 37044210
Honda Motor Co. Ltd. 38,000 573,407 43812810
Renault SA Ord. (a) 13,000 431,647 75999F93
Suzuki Motor Corp. 55,000 517,286 86958592
Volvo Aktiebolaget Class B 100,000 2,000,259 92885630
10,098,599
TIRES & INNER TUBES - 10.9%
Bandag, Inc. 56,800 3,408,000 05981510
Cooper Tire & Rubber Co. 107,700 3,015,600 21683110
6,423,600
TOTAL AUTOS, TIRES, & ACCESSORIES 56,008,793
CONSUMER ELECTRONICS - 1.4%
RADIOS, TELEVISIONS, STEREOS - 1.4%
Harman International Industries, Inc. 20,300 852,600 41308610
ELECTRICAL EQUIPMENT - 0.2%
ELECTRICAL EQUIPMENT, NEC - 0.2%
Satcon Technology Corp. (a) 10,000 90,000 80389310
INDUSTRIAL MACHINERY & EQUIPMENT - 3.0%
METAL WORKING MACHINERY - 0.8%
Exco Technologies Ltd. (a) 79,500 457,702 30150P10
STORAGE BATTERIES - 2.2%
Exide Corp. 25,400 1,308,100 30205110
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,765,802
SHARES VALUE (NOTE 1)
IRON & STEEL - 0.9%
METAL FORGINGS & STAMPINGS - 0.9%
Linamar Corp. 40,000 $ 518,153 53278L10
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $59,586,624) $ 59,235,348
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities, aggre-
gated $57,691,960 and $190,744,854, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $68,846 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $8,939,000 and $2,866,840,
respectively. The weighted average interest rate paid was 5.0% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 81.1%
Canada 10.3
Sweden 3.4
Japan 1.8
Italy 1.8
Others (individually less than 1%) 1.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $60,208,495. Net unrealized depreciation aggregated
$973,147, of which $3,463,412 related to appreciated investment securities
and $4,436,559 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending February 28, 1996
$3,944,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
The fund hereby designates $11,789,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
AUTOMOTIVE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (cost $59,586,624) - See accompanying schedule $ 59,235,348
Receivable for investments sold 2,890,840
Receivable for fund shares sold 367,177
Dividends receivable 88,889
Redemption fees receivable 154
TOTAL ASSETS 62,582,408
LIABILITIES
Payable to custodian bank $ 161,876
Payable for investments purchased 507,170
Payable for fund shares redeemed 1,726,166
Accrued management fee 32,760
Other payables and 79,218
accrued expenses
TOTAL LIABILITIES 2,507,190
NET ASSETS $ 60,075,218
Net Assets consist of:
Paid in capital $ 54,926,990
Undistributed net investment income 165,781
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 5,333,723
Net unrealized appreciation (depreciation) on investments (351,276
)
NET ASSETS, for 3,028,585 shares outstanding $ 60,075,218
NET ASSET VALUE and redemption price per share ($60,075,218 (divided by) 3,028,585 shares) $19.84
Maximum offering price per share (100/97.00 of $19.84) $20.45
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 1,747,661
Dividends
Interest 440,624
TOTAL INCOME 2,188,285
EXPENSES
Management fee $ 628,194
Transfer agent 1,188,955
Fees
Redemption fees (180,650
)
Accounting fees and expenses 101,598
Non-interested trustees' compensation 1,333
Custodian fees and expenses 17,654
Registration fees 43,899
Audit 32,016
Legal 2,669
Interest 9,963
Reports to shareholders 13,318
Miscellaneous 1,207
Total expenses before reductions 1,860,156
Expense reductions (17,986 1,842,170
)
NET INVESTMENT INCOME 346,115
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 11,567,549
Foreign currency transactions (25,832 11,541,717
)
Change in net unrealized appreciation (depreciation) on investment securities (31,661,358
)
NET GAIN (LOSS) (20,119,641
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (19,773,526
)
OTHER INFORMATION $444,228
Sales Charges Paid to FDC
Deferred sales charges withheld $7,057
by FDC
Exchange fees withheld by FSC $129,360
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 346,115 $ 300,002
Net investment income
Net realized gain (loss) 11,541,717 9,992,964
Change in net unrealized appreciation (depreciation) (31,661,358 22,125,239
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (19,773,526 32,418,205
)
Distributions to shareholders: (154,502 (277,866
From net investment income ) )
From net realized gain (7,650,364 (8,000,284
) )
TOTAL DISTRIBUTIONS (7,804,866 (8,278,150
) )
Share transactions 91,986,801 296,617,520
Net proceeds from sales of shares
Reinvestment of distributions 7,692,677 8,140,832
Cost of shares redeemed (240,957,682 (210,814,302
) )
Paid in capital portion of redemption fees 233,563 254,484
Net increase (decrease) in net assets resulting from share transactions (141,044,641 94,198,534
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (168,623,033 118,338,589
)
NET ASSETS
Beginning of period 228,698,251 110,359,662
End of period (including undistributed net investment income of $165,781 and $230,333, respectively)$ 60,075,218 $ 228,698,251
OTHER INFORMATION
Shares
Sold 4,119,242 12,377,664
Issued in reinvestment of distributions 397,089 357,869
Redeemed (10,463,135 (9,094,036
) )
Net increase (decrease) (5,946,804) 3,641,497
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.48 $ 20.69 $ 18.65 $ 12.58 $ 12.17
Income from Investment Operations
Net investment income .08 .05 .13 .06 .25
Net realized and unrealized gain (loss) (3.46) 6.00 2.26 6.55 .29
Total from investment operations (3.38) 6.05 2.39 6.61 .54
Less Distributions (.05) (.05) (.06) - (.18)
From net investment income
From net realized gain (2.26) (1.26) (.36) (.70) -
Total distributions (2.31) (1.31) (.42) (.70) (.18)
Redemption fees added to paid in capital .05 .05 .07 .16 .05
Net asset value, end of period $ 19.84 $ 25.48 $ 20.69 $ 18.65 $ 12.58
TOTAL RETURN B, C (12.59)% 30.45% 13.42% 56.27% 4.81%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 60,075 $ 228,698 $ 110,360 $ 178,445 $ 974
Ratio of expenses to average net assets 1.80% 1.68% 1.57% A 2.48% 2.25%
Ratio of expenses to average net assets before expense reductions 1.82% 1.69% 1.57% A 2.48% 2.85%
Ratio of net investment income to average net assets .34% .22% .72% A .36% 2.06%
Portfolio turnover rate 63% 64% 140% A 29% 219%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
CHEMICALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
CHEMICALS 9.90% 106.48% 394.52%
CHEMICALS
(INCL. 3% SALES CHARGE) 6.60% 100.28% 379.68%
S&P 500 7.36% 71.20% 246.77%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on July 29, 1985. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
CHEMICALS 9.90% 15.60% 18.13%
CHEMICALS
(INCL. 3% SALES CHARGE) 6.60% 14.90% 17.75%
S&P 500 7.36% 11.35% 13.84%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select ChemicalS (06Standard & Poor's 50
07/29/85 9700.00 10000.00
07/31/85 9641.80 9926.31
08/31/85 9981.30 9841.93
09/30/85 9991.00 9533.88
10/31/85 10631.20 9974.35
11/30/85 11300.50 10658.59
12/31/85 12018.30 11174.46
01/31/86 12532.40 11237.04
02/28/86 13977.70 12077.57
03/31/86 14724.60 12751.50
04/30/86 14782.80 12607.41
05/31/86 15199.90 13278.12
06/30/86 15568.50 13502.52
07/31/86 14549.20 12747.73
08/31/86 15630.16 13693.61
09/30/86 14393.38 12561.15
10/31/86 15269.84 13285.93
11/30/86 15532.78 13608.78
12/31/86 15250.37 13261.75
01/31/87 17285.70 15048.11
02/28/87 18892.53 15642.51
03/31/87 19467.10 16094.58
04/30/87 19895.59 15951.34
05/31/87 19632.65 16090.11
06/30/87 20733.10 16902.66
07/31/87 22086.74 17759.63
08/31/87 22895.03 18422.06
09/30/87 23304.04 18018.62
10/31/87 16214.47 14137.41
11/30/87 15669.12 12972.49
12/31/87 17511.02 13959.69
01/31/88 17081.54 14547.40
02/29/88 18975.15 15225.31
03/31/88 19941.48 14754.84
04/30/88 20175.74 14918.62
05/31/88 19414.39 15048.41
06/30/88 21981.50 15739.14
07/31/88 21317.76 15679.33
08/31/88 20390.48 15146.23
09/30/88 20644.26 15791.46
10/31/88 20966.37 16230.46
11/30/88 20263.59 15998.37
12/31/88 21181.11 16278.34
01/31/89 22596.44 17469.91
02/28/89 22313.37 17034.91
03/31/89 22557.39 17431.83
04/30/89 23201.61 18336.54
05/31/89 23738.46 19079.17
06/30/89 23455.03 18970.42
07/31/89 24949.67 20683.44
08/31/89 26092.63 21088.84
09/30/89 25164.58 21002.38
10/31/89 23386.65 20515.12
11/30/89 23884.86 20933.63
12/31/89 24847.83 21436.04
01/31/90 23077.40 19997.68
02/28/90 23231.80 20255.65
03/31/90 23921.44 20792.42
04/30/90 23365.61 20272.61
05/31/90 25403.67 22249.19
06/30/90 25611.02 22097.90
07/31/90 25695.76 22027.18
08/31/90 22264.01 20035.93
09/30/90 21162.46 19060.18
10/31/90 21406.07 18978.22
11/30/90 22835.96 20204.21
12/31/90 23821.00 20767.91
01/31/91 25420.37 21673.39
02/28/91 27369.26 23223.04
03/31/91 28025.96 23785.03
04/30/91 27803.53 23842.12
05/31/91 29731.24 24872.10
06/30/91 28923.24 23732.96
07/31/91 30317.26 24838.91
08/31/91 30913.18 25427.59
09/30/91 30679.07 25002.95
10/31/91 31168.57 25337.99
11/30/91 29614.93 24316.87
12/31/91 33030.62 27098.72
01/31/92 33664.98 26594.68
02/29/92 34879.02 26940.42
03/31/92 34627.46 26415.08
04/30/92 35885.25 27191.68
05/31/92 35677.44 27324.92
06/30/92 34619.91 26917.78
07/31/92 35712.32 28018.72
08/31/92 34492.08 27444.33
09/30/92 34526.94 27768.18
10/31/92 34178.30 27865.36
11/30/92 35212.60 28815.57
12/31/92 35971.89 29170.00
01/31/93 35934.88 29415.03
02/28/93 35305.75 29815.08
03/31/93 36144.60 30444.17
04/30/93 36815.01 29707.43
05/31/93 37372.43 30503.58
06/30/93 36434.95 30592.05
07/31/93 36992.37 30469.68
08/31/93 38803.98 31624.48
09/30/93 37575.13 31380.97
10/31/93 38994.01 32030.56
11/30/93 39285.39 31726.27
12/31/93 40560.85 32110.15
01/31/94 43718.04 33201.90
02/28/94 43649.10 32302.13
03/31/94 42339.35 30893.75
04/30/94 44386.86 31289.19
05/31/94 45455.59 31802.34
06/30/94 44886.53 31023.18
07/31/94 46912.95 32040.74
08/31/94 49633.34 33354.41
09/30/94 49272.47 32537.23
10/31/94 49189.20 33269.31
11/30/94 45330.68 32057.65
12/31/94 46553.86 32533.06
01/31/95 45337.32 33376.64
02/28/95 47968.44 34677.33
Let's say you invested $10,000 in Fidelity Select Chemicals Portfolio on
July 29, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $47,968 - a 379.68%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $34,677 over the same period - a 246.77% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Union Carbide Corp. 9.0
Grace (W.R.) & Co. 7.5
Eastman Chemical Co. 5.4
Dow Chemical Co. 3.9
Ferro Corp. 3.7
Geon Co. 3.5
Cytec Industries, Inc. 3.0
Minnesota Mining & Manufacturing Co. 2.8
Hanna (M.A.) Co. 2.8
Olin Corp. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 26.3
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 7.1
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 9.6
Row: 1, Col: 6, Value: 46.0
Chemicals 46.0%
Plastics, Resins &
Elastomers 9.6%
Adhesives & Sealants 7.2%
Plastics & Synthetic Resins 7.1%
Agricultural Chemicals 3.8%
All Others 26.3%*
* INCLUDES SHORT-TERM INVESTMENTS
CHEMICALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
David Felman,
Portfolio Manager of Fidelity Select Chemicals Portfolio
Q. DAVID, HOW HAS THE FUND PERFORMED?
A. Results generally have been quite good. For the 12 months ended February
28, 1995, the fund returned 9.90%, which compares with a 7.36% return for
the S&P 500.
Q. WHAT HAVE BEEN THE MAIN DRIVERS OF FUND PERFORMANCE?
A. There were three major factors that supported the fund's growth.
Chemical stocks generally are cyclical: when the economy is growing, demand
for chemicals grows as well. So the relative strength of the domestic
economy probably has been the biggest factor in fund performance;
increasing demand, especially for "raw material" commodity chemicals,
helped those manufacturers generate strong earnings and improved cash
flows. Economic growth in selected parts of the world also helped fuel
increased demand. A third and related factor was that growing demand caught
some of the commodity companies with low inventories, which in turn drove
product prices much higher. In early spring 1994, for example, the price of
polyethylene, a core commodity in the manufacturing of plastics, soared
from $600 to $1,150 a ton. The combined effect of these factors was that
the many of the commodity chemical companies - among them Union Carbide,
Sterling Chemicals and Lyondell - showed very strong performance for the
period.
Q. HOW DID THE SPECIALTY CHEMICAL COMPANIES DO?
A. The specialty chemical group had a generally lackluster year, with one
notable exception. Cytec Industries, a diversified manufacturer that was
recently spun off from American Cyanamid, saw spectacular growth and was
the biggest single contributor to overall fund performance. However, the
group as a whole had a tough year. The specialty companies, which typically
buy commodity chemicals and create value-added products, were caught
between dramatic commodity price increases and their somewhat limited
ability to pass along those increases to end-users. Lubrizol and Great
Lakes Chemical, for example, are two companies that were hurt by this price
dynamic and whose earnings just didn't come through for the period.
Q. IT SOUNDS AS IF THE PROSPECTS OF THE SPECIALTY GROUP COULD IMPROVE AS
THEY CATCH UP IN THE PRICING CYCLE . . .
A. I think that's right. Many of the specialty companies have already
absorbed the price increases from their raw materials suppliers and now may
be in a better position to pass through those increases. But the issue for
these companies is whether commodity chemical prices will continue to rise
and how successful the specialty chemical companies may be in raising
prices for their finished products.
Q. YOU'VE BEEN RUNNING THE FUND SINCE JANUARY 1995, DAVID. WHAT IS YOUR
INDUSTRY OUTLOOK AND HOW WILL IT AFFECT YOUR STRATEGY FOR THE FUTURE?
A. The fund's recent performance has benefited from the strength of the
commodity chemical group in response to market demand. Looking forward,
there are a number of questions. Principal among them is whether the
domestic economy will continue to be good enough to sustain the commodity
chemical group's growth, or whether it will weaken and put a lid on
near-term prospects. Also important is whether there will be sufficient
strength in the international economies if any weakness develops
domestically. I think it's a very tough call as to where the markets are
headed. Another area I'm watching is the industry's discipline in
maintaining its current production capacity; if too many new facilities
come on line, oversupply could put a damper on growth. At the moment, I
believe it is important for the fund to be positioned in commodity stocks,
like Union Carbide, whose valuations - prices relative to other measures
such as earnings - offer a certain amount of cushion in the event of an
economic slowdown. I've also begun to shift the fund's emphasis more toward
the specialty chemical stocks, which are usually safer in this kind of
environment. I'll probably continue to give them greater emphasis going
forward.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1995, more than
$97 million
MANAGER: David Felman, since January 1995;
manager, Fidelity Select Telecommunications
Portfolio, since April 1994; analyst, specialty
chemicals, construction and engineering
industries; joined Fidelity in 1992
(checkmark)
CHEMICALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 93.4%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 0.8%
CEMENT - 0.3%
Vulcan Materials Co. 5,000 $ 266,245 92916010
PAINT & VARNISH - 0.5%
Dexter Corp. 15,200 324,900 25216510
RPM, Inc. 10,000 183,750 74968510
508,650
TOTAL BUILDING MATERIALS 774,895
CHEMICALS & PLASTICS - 88.4%
ADHESIVES & SEALANTS - 7.2%
Ferro Corp. 142,200 3,643,875 31540510
Fuller (H.B.) Co. 29,553 982,637 35969410
Loctite Corp. 4,400 202,400 54013710
Methanex Corp. (a) 6,500 66,658 59151K10
Nalco Chemical Co. 62,700 2,155,313 62985310
7,050,883
AGRICULTURAL CHEMICALS - 3.8%
Cominco Fertilizer Ltd. (a) 58,600 1,555,090 20043C10
Indo Gulf Fertilizer and Chemicals Corp.
Ltd. GDR (a)(b) 1,000 2,050 45577P10
OM Group, Inc. 80,600 1,934,400 67087210
Vigoro Corp. 7,000 246,750 92675410
3,738,290
CHEMICALS - 46.0%
AKZO NV sponsored ADR 10,000 582,500 01019930
Avery Dennison Corp. 8,300 311,250 05361110
Cytec Industries, Inc. (a) 76,171 2,951,626 23282010
Dow Chemical Co. 56,600 3,792,200 26054310
du Pont (E.I.) de Nemours & Co. 45,400 2,548,075 26353410
Grace (W.R.) & Co. 164,700 7,411,500 38388310
Hercules, Inc. 22,400 982,800 42705610
Hoechst AG Ord. 5,200 1,142,881 43439010
Imperial Chemical Industries PLC ADR 16,700 745,238 45270450
Lawter International, Inc. 8,988 115,721 52078610
Lyondell Petrochemical Co. 60,300 1,454,738 55207810
Minnesota Mining & Manufacturing Co. 50,000 2,737,500 60405910
Monsanto Co. 16,200 1,283,850 61166210
Morton International, Inc. 18,900 552,825 61933110
NL Industries, Inc. (a) 20,000 237,500 62915640
Olin Corp. 53,400 2,716,725 68066520
PPG Industries, Inc. 43,600 1,602,300 69350610
Raychem Corp. 48,000 1,938,000 75460310
Reliance Industries Ltd. GDS (b) 17,000 272,000 75947010
Rohm & Haas Co. 5,000 280,625 77537110
Sterling Chemical, Inc. (a) 165,500 1,861,875 85890310
Union Carbide Corp. 309,100 8,847,988 90558110
Witco Corp. 30,200 864,475 97738510
45,234,192
CHEMICALS & ALLIED PRODUCTS - 2.9%
Kemira OY sponsored ADR (a)(b) 43,200 680,400 48836510
Kemira OY (a) 260,000 2,133,724 48836592
2,814,124
CHEMICALS, GENERAL - 3.6%
Albemarle Corp. 114,600 1,633,050 01265310
Great Lakes Chemical Corp. 30,800 1,851,850 39056810
Sybron Chemical Industry Corp. (a) 7,200 90,000 87090310
3,574,900
INDUSTRIAL GASES - 1.6%
Airgas, Inc. (a) 50,000 1,293,750 00936310
CBI Industries, Inc. 10,000 242,500 12480010
1,536,250
SHARES VALUE (NOTE 1)
NITROGENOUS FERTILIZERS - 1.2%
Mississippi Chemical Corp. 67,600 $ 1,233,700 60528820
NONCELLULOSIC MAN-MADE ORGANIC FIBERS - 0.0%
Yizheng Chemical Fibre Co. Class H 110,000 38,770 99599E22
ORGANIC CHEMICALS - 2.1%
Lubrizol Corp. 61,000 2,043,500 54927110
PLASTICS & SYNTHETIC RESINS - 7.1%
AEP Industries, Inc. 150 2,850 00103110
ARCO Chemical Co. 42,300 1,797,750 00192010
Geon Co. 118,700 3,442,300 37246W10
Schulman (A.), Inc. 6,562 187,017 80819410
Wellman, Inc. 58,660 1,583,820 94970210
7,013,737
PLASTICS - 3.3%
Carlisle Plastics, Inc. Class A (a) 27,700 152,350 14252210
Hanna (M.A.) Co. 111,850 2,726,344 41052210
Sealed Air Corp. (a) 8,300 347,563 81211510
3,226,257
PLASTICS, RESINS & ELASTOMERS - 9.6%
Eastman Chemical Co. 96,450 5,280,638 27743210
EVC International NV (a)(b) 12,000 532,146 29999E23
PT Tri Polyta Indonesia sponsored ADR (a) 61,000 1,448,750 69365B10
Praxair, Inc. 90,153 2,039,712 74005P10
Rexene Corp. (a) 14,600 153,300 76168310
9,454,546
TOTAL CHEMICALS & PLASTICS 86,959,149
DRUGS & PHARMACEUTICALS - 1.3%
DRUGS - 0.4%
Rhone Poulenc:
Sponsored ADR representing
1/4 share 6,700 159,963 76242660
SA Class A 10,000 238,420 76242695
398,383
PHARMACEUTICAL PREPARATIONS - 0.9%
Copley Pharmaceutical, Inc. (a) 55,000 893,750 21745K10
TOTAL DRUGS & PHARMACEUTICALS 1,292,133
FOODS - 0.3%
Montedison Spa ADR 40,000 290,000 61237630
INDUSTRIAL MACHINERY & EQUIPMENT - 0.5%
PUMPING EQUIPMENT - 0.5%
Duriron Company, Inc. 25,000 468,750 26684910
METALS & MINING - 0.3%
NON-METALLIC MINERAL MINING - 0.3%
American Colloid Co. 23,500 304,031 02516810
OIL & GAS - 0.9%
CRUDE PETROLEUM & GAS - 0.7%
Burlington Resources, Inc. 1,500 57,750 12201410
Occidental Petroleum Corp. 33,000 655,875 67459910
713,625
GENERAL PETROLEUM PRODUCTS - 0.2%
Shanghai Petrochemical Ltd.
Class H ADR 5,000 156,250 81942410
TOTAL OIL & GAS 869,875
POLLUTION CONTROL - 0.1%
POLLUTION EQUIPMENT & DESIGN - 0.1%
Harding Associates, Inc. (a) 13,500 81,000 41226410
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TEXTILES & APPAREL - 0.8%
CARPETS & RUGS - 0.7%
Image Industries, Inc. (a) 45,000 $ 714,375 45244B10
SILK MILLS - 0.1%
Worldtex Corp. (a) 28,000 112,000 98190710
TOTAL TEXTILES & APPAREL 826,375
TOTAL COMMON STOCKS
(Cost $87,365,605) 91,866,208
REPURCHASE AGREEMENTS - 6.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $ 6,503,098 6,502,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $93,867,605) $ 98,368,208
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,486,596 or 1.5% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $161,552,268 and $133,753,617, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $130,974 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $6,825,000 and $5,790,000,
respectively. The weighted average interest rate paid was 3.9% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 90.0%
Finland 2.9
Canada 1.6
Indonesia 1.5
Germany 1.2
Netherlands 1.1
Others (individually less than 1%) 1.7
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $94,087,232. Net unrealized appreciation aggregated
$4,280,976, of which $6,558,476 related to appreciated investment
securities and $2,277,500 related to depreciated investment securities.
The fund hereby designates $2,225,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
CHEMICALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $6,502,000) (cost $93,867,605) - See $ 98,368,208
accompanying schedule
Cash 491
Receivable for investments sold 1,426,187
Receivable for fund shares sold 639,972
Dividends receivable 413,004
Redemption fees receivable 243
Other receivables 11,945
TOTAL ASSETS 100,860,050
LIABILITIES
Payable for investments purchased $ 642,840
Payable for fund shares redeemed 2,528,298
Accrued management fee 59,110
Other payables and accrued expenses 118,953
TOTAL LIABILITIES 3,349,201
NET ASSETS $ 97,510,849
Net Assets consist of:
Paid in capital $ 89,656,771
Undistributed net investment income 426,403
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 2,927,072
Net unrealized appreciation (depreciation) on investments 4,500,603
NET ASSETS, for 2,875,933 shares outstanding $ 97,510,849
NET ASSET VALUE and redemption price per share ($97,510,849 (divided by) 2,875,933 shares) $33.91
Maximum offering price per share (100/97.00 of $33.91) $34.96
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 2,974,778
Dividends
Interest (including security lending 734,740
fees of $7,345)
TOTAL INCOME 3,709,518
EXPENSES
Management fee $ 888,515
Transfer agent 1,200,369
Fees
Redemption fees (145,881
)
Accounting and security lending fees 144,351
Non-interested trustees' compensation 1,150
Custodian fees and expenses 22,329
Registration fees 52,255
Audit 23,252
Legal 927
Interest 2,538
Reports to shareholders 1,836
Miscellaneous 1,002
Total expenses before reductions 2,192,643
Expense reductions (18,109 2,174,534
)
NET INVESTMENT INCOME 1,534,984
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 4,787,500
Foreign currency transactions 46 4,787,546
Change in net unrealized appreciation (depreciation) on investment securities 576,053
NET GAIN (LOSS) 5,363,599
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6,898,583
OTHER INFORMATION $1,051,981
Sales Charges Paid to FDC
Deferred sales charges withheld $6,676
by FDC
Exchange fees withheld by FSC $115,725
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,534,984 $ 265,602
Net investment income
Net realized gain (loss) 4,787,546 2,851,580
Change in net unrealized appreciation (depreciation) 576,053 2,343,419
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,898,583 5,460,601
Distributions to shareholders: (1,029,165 (189,427
From net investment income ) )
From net realized gain (2,261,141 (2,552,992
) )
TOTAL DISTRIBUTIONS (3,290,306 (2,742,419
) )
Share transactions 295,805,417 59,344,504
Net proceeds from sales of shares
Reinvestment of distributions 3,230,231 2,653,509
Cost of shares redeemed (267,599,716 (31,346,756
) )
Paid in capital portion of redemption fees 249,480 51,531
Net increase (decrease) in net assets resulting from share transactions 31,685,412 30,702,788
TOTAL INCREASE (DECREASE) IN NET ASSETS 35,293,689 33,420,970
NET ASSETS
Beginning of period 62,217,160 28,796,190
End of period (including undistributed net investment income of $426,403 and $96,969, respectively) $ 97,510,849 $ 62,217,160
OTHER INFORMATION
Shares
Sold 8,887,417 1,911,622
Issued in reinvestment of distributions 101,777 93,252
Redeemed (8,078,436 (1,045,994
) )
Net increase (decrease) 910,758 958,880
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 31.66 $ 28.62 $ 32.81 $ 26.25 $ 22.70
Income from Investment Operations
Net investment income .36 .29 .30 .12 .28
Net realized and unrealized gain (loss) 2.65 5.97 (.84) 7.27 3.94
Total from investment operations 3.01 6.26 (.54) 7.39 4.22
Less Distributions (.22) (.23) (.31) (.18) (.10)
From net investment income
From net realized gain (.60) (3.05) (3.36) (.71) (.60)
Total distributions (.82) (3.28) (3.67) (.89) (.70)
Redemption fees added to paid in capital .06 .06 .02 .06 .03
Net asset value, end of period $ 33.91 $ 31.66 $ 28.62 $ 32.81 $ 26.25
TOTAL RETURN B, C 9.90% 23.63% (1.61)% 29.07% 18.99%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 97,511 $ 62,217 $ 28,796 $ 39,566 $ 20,396
Ratio of expenses to average net assets 1.51% 1.93% 1.89% A 2.16% 2.50%
Ratio of expenses to average net assets before expense reductions 1.52% 1.93% 1.89% A 2.16% 2.52%
Ratio of net investment income to average net assets 1.07% .97% 1.21% A .40% 1.21%
Portfolio turnover rate 106% 81% 214% A 87% 87%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
CONSTRUCTION AND HOUSING PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
CONSTRUCTION AND HOUSING -12.54% 87.40% 154.39%
CONSTRUCTION AND HOUSING
(INCL. 3% SALES CHARGE) -15.17% 81.78% 146.76%
S&P 500 7.36% 71.20% 175.04%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on September 29, 1986. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
CONSTRUCTION AND HOUSING -12.54% 13.38% 11.72%
CONSTRUCTION AND HOUSING
(INCL. 3% SALES CHARGE) -15.17% 12.70% 11.32%
S&P 500 7.36% 11.35% 12.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Construction Standard & Poor's 50
09/29/86 9700.00 10000.00
09/30/86 9709.70 9962.80
10/31/86 10262.60 10537.66
11/30/86 10369.30 10793.72
12/31/86 10437.20 10518.48
01/31/87 12192.90 11935.32
02/28/87 13483.00 12406.77
03/31/87 14307.50 12765.32
04/30/87 13327.80 12651.71
05/31/87 12949.50 12761.78
06/30/87 12804.00 13406.25
07/31/87 13599.40 14085.95
08/31/87 13890.40 14611.35
09/30/87 12823.40 14291.37
10/31/87 8749.40 11213.00
11/30/87 8109.20 10289.05
12/31/87 9141.25 11072.05
01/31/88 9466.31 11538.18
02/29/88 10352.85 12075.86
03/31/88 10766.57 11702.72
04/30/88 11081.79 11832.62
05/31/88 11012.84 11935.56
06/30/88 11662.97 12483.41
07/31/88 11544.76 12435.97
08/31/88 10953.73 12013.15
09/30/88 11288.65 12524.91
10/31/88 11367.45 12873.10
11/30/88 11229.55 12689.01
12/31/88 11809.47 12911.07
01/31/89 12529.18 13856.16
02/28/89 12377.13 13511.14
03/31/89 12691.37 13825.95
04/30/89 13188.08 14543.52
05/31/89 13654.38 15132.53
06/30/89 13645.75 15046.28
07/31/89 14199.40 16404.95
08/31/89 14438.23 16726.49
09/30/89 14698.77 16657.91
10/31/89 13873.73 16271.45
11/30/89 14079.99 16603.39
12/31/89 13769.50 17001.87
01/31/90 12900.94 15861.04
02/28/90 13167.30 16065.65
03/31/90 13908.47 16491.39
04/30/90 13503.14 16079.11
05/31/90 14753.86 17646.82
06/30/90 14487.50 17526.82
07/31/90 13731.86 17470.73
08/31/90 11986.06 15891.38
09/30/90 10748.37 15117.47
10/31/90 10370.55 15052.46
11/30/90 11373.73 16024.85
12/31/90 12442.06 16471.95
01/31/91 13536.43 17190.12
02/28/91 14722.01 18419.22
03/31/91 15086.81 18864.96
04/30/91 15321.32 18910.24
05/31/91 16845.63 19727.16
06/30/91 15985.76 18823.66
07/31/91 16402.67 19700.84
08/31/91 17080.14 20167.75
09/30/91 16702.32 19830.95
10/31/91 16415.70 20096.68
11/30/91 15594.91 19286.79
12/31/91 17582.47 21493.19
01/31/92 18889.56 21093.42
02/29/92 19198.76 21367.64
03/31/92 19184.71 20950.97
04/30/92 19451.75 21566.92
05/31/92 20070.15 21672.60
06/30/92 18636.06 21349.68
07/31/92 18973.62 22222.88
08/31/92 18326.63 21767.31
09/30/92 18565.73 22024.17
10/31/92 19212.72 22101.25
11/30/92 20323.85 22854.91
12/31/92 20872.39 23136.02
01/31/93 21744.41 23330.36
02/28/93 22138.23 23647.66
03/31/93 22658.63 24146.62
04/30/93 22123.97 23562.27
05/31/93 22363.22 24193.74
06/30/93 22630.62 24263.90
07/31/93 23404.68 24166.85
08/31/93 24375.77 25082.77
09/30/93 25163.90 24889.63
10/31/93 26078.70 25404.85
11/30/93 25670.56 25163.50
12/31/93 27887.76 25467.98
01/31/94 28798.84 26333.89
02/28/94 28215.18 25620.25
03/31/94 26563.83 24503.20
04/30/94 26503.73 24816.84
05/31/94 25101.27 25223.84
06/30/94 24485.90 24605.86
07/31/94 25187.13 25412.93
08/31/94 26145.96 26454.86
09/30/94 24686.25 25806.71
10/31/94 23956.40 26387.37
11/30/94 22983.26 25426.34
12/31/94 23441.17 25803.41
01/31/95 23544.05 26472.49
02/28/95 24675.69 27504.13
Let's say you invested $10,000 in Fidelity Select Construction and Housing
Portfolio on September 29, 1986, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $24,676 -
a 146.76% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $27,504 over the same period - a 175.04% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Medusa Corp. 8.6
Federal National Mortgage Association 7.4
Armstrong World Industries, Inc. 5.8
General Electric Co. 5.6
Pulte Corp. 5.1
Lafarge Corp. 5.1
Vulcan Materials Co. 4.7
National Gypsum Co. 4.6
Federal Home Loan Mortgage Corporation 4.6
Lennar Corp. 3.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 41.3
Row: 1, Col: 2, Value: 5.6
Row: 1, Col: 3, Value: 5.8
Row: 1, Col: 4, Value: 12.0
Row: 1, Col: 5, Value: 13.3
Row: 1, Col: 6, Value: 22.0
Cement 22.0%
Operative Builders 13.3%
Federal & Federally Sponsored
Credit Agencies 12.0%
Floor Coverings 5.8%
Concrete, Gypsum, Plaster 5.6%
All Others 41.3%*
* INCLUDES SHORT-TERM INVESTMENTS
CONSTRUCTION AND HOUSING PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Bill Bower,
Portfolio Manager of Fidelity Select Construction and Housing Portfolio
Q. BILL, IT'S BEEN A TOUGH YEAR FOR THE CONSTRUCTION AND HOUSING SECTOR.
HOW HAS THE FUND HELD UP?
A. The fund probably took a harder hit than the sector as a whole. For the
year ended February 28, 1995, it had a -12.54% return, compared to the S&P
500, which returned 7.36%.
Q. WHAT HURT THE FUND'S PERFORMANCE?
A. The biggest factor was rising interest rates. The increase was dramatic
and prolonged, and, in many cases, the market overreacted. Prices on home
building stocks, for example, went down to recession-like levels.
Unfortunately, they were one of our heaviest investments. The story was
much the same with cement companies, another one of our concentrations. In
addition, the fund lost half its assets through redemptions between
September and February. As money left the fund, I've decided to take
profits in companies like Lowe's, a retail lumber company, and Leggett &
Platt, a furniture maker, both of which had done well for the fund and
could have continued to do so. Finally, some of our more defensive
investments - stocks like Federal National Mortgage Association (FNMA) that
investors tend to hold onto even when rates rise - didn't work out as well
as we'd hoped.
Q. SINCE TAKING OVER THE FUND IN DECEMBER, HAVE YOU MADE ANY CHANGES?
A. As assets declined, I cut the number of stocks in the fund - from 43 to
35 - and focused on the inexpensive companies. I also increased our stake
in both builders and cement companies to make the fund as interest-rate
insensitive as possible. My thinking was that if we didn't have a
recession, the stocks would bounce back. And if we did, we wouldn't lose
much because they were already priced like we were in a recession. Since
December, the home builders - companies like Pulte and Lennar - have
started to come up. But they're not back to their previous levels.
Q. WHAT ABOUT THE CEMENT COMPANIES?
A. Companies like Medusa, LaFarge, and Vulcan haven't bounced back yet,
which has been a drag on performance. But I'm not surprised because they
usually rally later than builders. Demand is still strong for cement since
it goes into commercial buildings, highways and airports. That has helped
cement companies maintain favorable pricing for their products, which
should eventually translate into higher earnings.
Q. IN HINDSIGHT, DO YOU HAVE ANY REGRETS?
A. Sure. I wish I'd owned more National Gypsum, a company that makes the
gypsum wallboards found in homes. Over the period, it was the fund's top
performer, rising nearly 40%. National Gypsum is a good illustration of
what can happen when the market overreacts and takes a strong company's
stock down to extreme lows. The company still had solid earnings and good
cash flow, which - in combination with its cheap price - led to a couple of
takeover offers. They helped push the price up. Champion Enterprises, a
manufacturer of mobile homes, was another top contributor to the fund's
performance for the year. Again, I wish we'd owned more of it, as strong
earnings and a decision to acquire another firm helped its price rise.
Finally, another of our top investments, Armstrong, the floor covering
company, hasn't rallied much, despite the fact that management is doing a
great job. That has been disappointing.
Q. DO YOU SEE ANY REASON TO BE OPTIMISTIC ABOUT THE SECTOR'S PROSPECTS?
A. I'm guardedly optimistic. In past periods, we've seen investors come
back to these stocks once interest rates start looking more attractive. As
soon as it's clear that rates are coming down again, orders should pick up
and so should the stocks. Although builders' earnings may have peaked,
their stocks are still so cheap that their prices will probably rise anyway
as investors recognize that they're earning more than they would in a
recession - but are priced as if we were in a recession. I think there are
also opportunities left to buy cheap companies that still have the
potential to grow earnings, especially in the cement and building products
areas. So that's where I'll probably focus in the months ahead.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1995, more than
$16 million
MANAGER: William Bower, since December
1994; equity analyst, building materials,
housing, recreational vehicle, and
manufactured housing industries, since 1994;
joined Fidelity in June 1994
(checkmark)
CONSTRUCTION AND HOUSING PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 92.7%
SHARES VALUE (NOTE 1)
BUILDING MATERIALS - 36.5%
CEMENT - 22.0%
Cemex SA, Series B 33,750 $ 84,644 15299293
Centex Construction Products (a) 15,900 196,763 15231R10
Lafarge Corp. 48,000 858,000 50586210
Medusa Corp. 58,700 1,452,825 58507230
St. Lawrence Cement, Inc. Class A (a) 12,700 91,396 79106010
Texas Industries, Inc. 8,000 250,000 88249110
Vulcan Materials Co. 15,100 804,075 92916010
3,737,703
CONCRETE, GYPSUM, PLASTER - 5.6%
National Gypsum Co. (a) 15,900 783,075 63631710
USG Corp. (a) 7,200 172,800 90329340
955,875
FLOOR COVERINGS - 5.8%
Armstrong World Industries, Inc. 21,600 988,196 04247610
PAVING, ROOFING & SIDING - 2.3%
Bird Corp. (a) 4,900 41,038 09076310
Carlisle Companies, Inc. 9,600 342,000 14233910
383,038
PLUMBING SUPPLIES - WHOLESALE - 0.8%
Masco Corp. 5,150 129,394 57459910
TOTAL BUILDING MATERIALS 6,194,206
CONSTRUCTION - 17.3%
GENERAL BUILDING - 1.0%
Schuler Homes, Inc. (a) 15,500 160,813 80818810
OPERATIVE BUILDERS - 13.3%
Centex Corp. 18,100 461,550 15231210
Continental Homes Holding Corp. 10,400 135,200 21148C10
Lennar Corp. 38,950 662,150 52605710
Pulte Corp. 38,000 874,000 74586710
Standard Pacific Corp. 18,100 124,438 85375C10
2,257,338
SINGLE-FAMILY HOUSING CONSTRUCTION - 3.0%
Beazer Homes USA, Inc. (a) 35,000 511,875 07556Q10
TOTAL CONSTRUCTION 2,930,026
ELECTRICAL EQUIPMENT- 5.6%
ELECTRICAL MACHINERY - 5.6%
General Electric Co. 17,400 954,825 36960410
ENGINEERING - 1.3%
ARCHITECTS & ENGINEERS - 1.3%
Fluor Corp. 4,500 219,375 34386110
FEDERAL SPONSORED CREDIT - 12.0%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 12.0%
Federal Home Loan Mortgage Corporation 13,400 777,200 31340030
Federal National Mortgage Association 16,300 1,257,138 31358610
2,034,338
HOME FURNISHINGS - 8.0%
FURNITURE - 3.1%
Leggett & Platt, Inc. 12,800 523,200 52466010
FURNITURE STORES - 3.4%
Ethan Allen Interiors, Inc. (a) 15,200 357,200 29760210
Haverty Furniture Companies, Inc. 16,750 221,938 41959610
579,138
NON-WOOD OFFICE FURNITURE - 1.5%
Miller (Herman), Inc. 11,900 260,313 60054410
TOTAL HOME FURNISHINGS 1,362,651
SHARES VALUE (NOTE 1)
LEISURE DURABLES & TOYS - 1.9%
TRAVEL TRAILERS AND CAMPERS - 1.9%
Champion Enterprises, Inc. (a) 9,700 $ 327,375 15849610
REAL ESTATE - 1.0%
SUBDIVIDED REAL ESTATE DEVELOPMENT - 1.0%
Newhall Land & Farming Co. 11,700 171,113 65142610
RETAIL & WHOLESALE, MISCELLANEOUS - 6.0%
BUILDING MATERIALS - RETAIL - 3.2%
BMC West Corp. (a) 5,600 75,600 05592610
Home Depot, Inc. (The) 10,466 469,662 43707610
545,262
LUMBER & BUILDING MATERIALS - RETAIL - 2.8%
Lowe's Companies, Inc. 14,000 470,750 54866110
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 1,016,012
TEXTILES & APPAREL - 3.1%
CARPETS & RUGS - 3.1%
Interface, Inc. Class A 26,800 378,550 45866510
Mohawk Industries, Inc. (a) 10,206 137,781 60819010
TOTAL TEXTILES & APPAREL 516,331
TOTAL COMMON STOCKS
(Cost $15,278,298) 15,726,252
REPURCHASE AGREEMENTS - 7.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $1,245,210 1,245,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $16,523,298) $ 16,971,252
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $16,981,644 and $62,122,255, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $22,274 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,951,000 and $1,993,222,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $16,703,454. Net unrealized appreciation aggregated
$267,798, of which $1,594,485 related to appreciated investment securities
and $1,326,687 related to depreciated investment securities.
The fund hereby designates $1,344,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its fiscal year ending February 28, 1996
$335,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
CONSTRUCTION AND HOUSING PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $1,245,000) (cost $16,523,298) - See $ 16,971,252
accompanying schedule
Cash 785
Receivable for fund shares sold 74,688
Dividends receivable 23,853
Redemption fees receivable 60
Other receivables 346
TOTAL ASSETS 17,070,984
LIABILITIES
Payable for investments purchased $ 10,205
Payable for fund shares redeemed 157,883
Accrued management fee 8,665
Other payables and accrued expenses 31,254
TOTAL LIABILITIES 208,007
NET ASSETS $ 16,862,977
Net Assets consist of:
Paid in capital $ 16,059,627
Accumulated net investment (loss) 1,585
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 353,811
Net unrealized appreciation (depreciation) on investments 447,954
NET ASSETS, for 1,004,539 shares outstanding $ 16,862,977
NET ASSET VALUE and redemption price per share ($16,862,977 (divided by) 1,004,539 shares) $16.79
Maximum offering price per share (100/97.00 of $16.79) $17.31
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 586,413
Dividends
Interest 80,724
TOTAL INCOME 667,137
EXPENSES
Management fee $ 251,922
Transfer agent 384,874
Fees
Redemption fees (47,480
)
Accounting fees and expenses 49,640
Non-interested trustees' compensation 463
Custodian fees and expenses 12,153
Registration fees 36,763
Audit 22,943
Legal 839
Interest 2,065
Reports to shareholders 4,092
Miscellaneous 473
Total expenses before reductions 718,747
Expense reductions (5,925 712,822
)
NET INVESTMENT INCOME (LOSS) (45,685
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 847,745
Foreign currency transactions (56 847,689
)
Change in net unrealized appreciation (depreciation) on investment securities (10,454,301
)
NET GAIN (LOSS) (9,606,612
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (9,652,297
)
OTHER INFORMATION $128,632
Sales Charges Paid to FDC
Deferred sales charges withheld $4,159
by FDC
Exchange fees withheld by FSC $37,088
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (45,685 $ 11,881
Net investment income (loss) )
Net realized gain (loss) 847,689 1,149,357
Change in net unrealized appreciation (depreciation) (10,454,301 7,883,107
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (9,652,297 9,044,345
)
Distributions to shareholders from net realized gains (804,434 (529,457
) )
Share transactions 23,825,749 103,244,564
Net proceeds from sales of shares
Reinvestment of distributions 794,528 523,498
Cost of shares redeemed (78,326,758 (62,476,673
) )
Paid in capital portion of redemption fees 27,046 81,997
Net increase (decrease) in net assets resulting from share transactions (53,679,435 41,373,386
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (64,136,166 49,888,274
)
NET ASSETS
Beginning of period 80,999,143 31,110,869
End of period (including undistributed net investment income of $1,585 and $12,162, respectively) $ 16,862,977 $ 80,999,143
OTHER INFORMATION
Shares
Sold 1,308,527 5,578,570
Issued in reinvestment of distributions 47,271 28,856
Redeemed (4,437,862 (3,497,427
) )
Net increase (decrease) (3,082,064) 2,109,999
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.82 $ 15.74 $ 13.84 $ 11.76 $ 11.66
Income from Investment Operations
Net investment income (loss) (.02) .01 .02 (.06) .01
Net realized and unrealized gain (loss) (2.50) 4.26 1.87 2.93 1.45
Total from investment operations (2.52) 4.27 1.89 2.87 1.46
Less Distributions - - - - (.16)
From net investment income
From net realized gain (.52) (.22) (.01) (.88) (1.27)
Total distributions (.52) (.22) (.01) (.88) (1.43)
Redemption fees added to paid in capital .01 .03 .02 .09 .07
Net asset value, end of period $ 16.79 $ 19.82 $ 15.74 $ 13.84 $ 11.76
TOTAL RETURN B, C (12.54)% 27.45% 13.81% 26.96% 13.46%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 16,863 $ 80,999 $ 31,111 $ 26,687 $ 4,070
Ratio of expenses to average net assets 1.74% 1.66% 2.02% A 2.50% 2.48%
Ratio of expenses to average net assets before expense reductions 1.76% 1.67% 2.02% A 3.10% 3.48%
Ratio of net investment income (loss) to average net assets (.11)% .03% .20% A (.49)% .08%
Portfolio turnover rate 45% 35% 60% A 183% 137%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
ENVIRONMENTAL SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
ENVIRONMENTAL SERVICES -13.91% 1.56% 10.60%
ENVIRONMENTAL SERVICES
(INCL. 3% SALES CHARGE) -16.50% -1.48% 7.28%
S&P 500 7.36% 71.20% 78.43%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 29, 1989. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
ENVIRONMENTAL SERVICES -13.91% 0.31% 1.79%
ENVIRONMENTAL SERVICES
(INCL. 3% SALES CHARGE) -16.50% -0.30% 1.25%
S&P 500 7.36% 11.35% 10.74%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select EnvironmentalStandard & Poor's 50
06/29/89 9700.00 10000.00
06/30/89 9573.90 9761.13
07/31/89 10485.70 10642.57
08/31/89 10621.50 10851.16
09/30/89 11193.80 10806.67
10/31/89 10941.60 10555.96
11/30/89 11009.50 10771.30
12/31/89 11368.64 11029.81
01/31/90 10358.96 10289.71
02/28/90 10562.84 10422.44
03/31/90 11019.14 10698.64
04/30/90 11077.39 10431.17
05/31/90 12106.49 11448.21
06/30/90 12485.12 11370.37
07/31/90 12407.45 11333.98
08/31/90 10863.80 10309.39
09/30/90 10281.29 9807.32
10/31/90 10135.66 9765.15
11/30/90 10485.17 10395.98
12/31/90 11087.10 10686.03
01/31/91 12057.94 11151.94
02/28/91 12611.33 11949.30
03/31/91 12611.33 12238.47
04/30/91 12572.49 12267.85
05/31/91 12601.62 12797.82
06/30/91 11650.19 12211.68
07/31/91 12019.11 12780.74
08/31/91 12232.70 13083.64
09/30/91 11941.44 12865.15
10/31/91 11494.85 13037.54
11/30/91 10863.80 12512.13
12/31/91 11936.56 13943.51
01/31/92 13005.20 13684.17
02/29/92 13146.34 13862.06
03/31/92 11835.74 13591.75
04/30/92 11482.89 13991.35
05/31/92 11190.52 14059.90
06/30/92 10592.18 13850.41
07/31/92 10665.30 14416.89
08/31/92 10445.94 14121.35
09/30/92 10571.29 14287.98
10/31/92 11072.70 14337.99
11/30/92 11762.13 14826.91
12/31/92 11772.57 15009.28
01/31/93 12002.39 15135.36
02/28/93 11866.59 15341.20
03/31/93 11574.10 15664.90
04/30/93 11333.84 15285.81
05/31/93 11584.55 15695.47
06/30/93 11438.30 15740.99
07/31/93 10957.79 15678.02
08/31/93 11542.76 16272.22
09/30/93 11553.21 16146.93
10/31/93 11877.03 16481.17
11/30/93 11354.74 16324.60
12/31/93 11699.45 16522.12
01/31/94 12691.82 17083.88
02/28/94 12462.01 16620.90
03/31/94 11333.84 15896.23
04/30/94 11521.87 16099.70
05/31/94 11490.53 16363.74
06/30/94 10801.10 15962.83
07/31/94 11030.91 16486.41
08/31/94 11417.41 17162.35
09/30/94 11344.29 16741.87
10/31/94 10957.79 17118.56
11/30/94 10341.48 16495.11
12/31/94 10581.74 16739.73
01/31/95 10592.18 17173.79
02/28/95 10727.98 17843.05
Let's say you invested $10,000 in Fidelity Select Environmental Services
Portfolio on June 29, 1989, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $10,728 -
a 7.28% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $17,843 over the same period - a 78.43% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Thermedics, Inc. 11.4
TETRA Technologies, Inc. 9.2
Browning-Ferris Industries, Inc. 6.3
United Waste Systems, Inc. 6.0
Heidemij NV 4.3
WMX Technologies, Inc. 4.3
Thermo Electron Corp. 4.1
Fluor Corp. 4.0
TRC Companies, Inc. 3.4
IMCO Recycling, Inc. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 33.0
Row: 1, Col: 2, Value: 5.7
Row: 1, Col: 3, Value: 8.699999999999999
Row: 1, Col: 4, Value: 11.4
Row: 1, Col: 5, Value: 14.3
Row: 1, Col: 6, Value: 26.9
Refuse Systems 26.9%
Pollution Equipment &
Design 14.3%
Medical Technology 11.4%
Hazardous Waste
Management 8.7%
Business Consulting Services 5.2%
All Others 33.5%*
* INCLUDES SHORT-TERM INVESTMENTS
ENVIRONMENTAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Philip Barton,
Portfolio Manager of Fidelity Select Environmental Services Portfolio
Q. PIP, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended February 28, 1995, the fund had a total return
of -13.91%, lagging the S&P 500, which returned 7.36% during the same
period.
Q. WHAT WERE SOME OF THE FACTORS THAT CONTRIBUTED TO THE FUND'S
PERFORMANCE?
A. The sector suffered from decreasing investor interest due to the
perception that the economy was slowing down. The sector is seen as
cyclical - meaning that it rises and falls with the economy - and the
market generally moved away from cyclicals, especially in the fourth
quarter of 1994. On top of that, the Republican congressional victories in
November hurt the sector, because the new leadership hinted at changes in
environmental regulations. Finally, one of the fund's larger investors made
a significant redemption from the fund in the fourth quarter, and I had to
sell stocks into the weakness of the market in order to meet the
redemption.
Q. ENVIRONMENTAL SERVICES HAS STRUGGLED AS A SECTOR OVER THE PAST FIVE
YEARS. WHAT WILL IT TAKE FOR IT TO REBOUND?
A. The most important event would be for the largest company in the solid
waste industry - WMX Technologies - to provide improved performance and pay
down long-term debt. If the company can increase its earnings through
restructuring and be rewarded for it with a higher stock price, you might
see more general strength in the sector. WMX stock has been battered
recently because, among other things, investors were disappointed about the
pace of restructuring that was going on in the company. Like most solid
waste companies, WMX grew during the 1980s through acquisition and volume.
At that time, the company had solid pricing power - the ability to raise
the prices of its services and still grow earnings - but that diminished in
the first years of the 1990s. The company realized that while it was
acquiring customers, its new revenues were not keeping pace with its new
costs. WMX has spent the past year and a half trying to correct that
imbalance of deteriorated profit margins.
Q. AND THIS HAS HAPPENED TO MOST OF THE SOLID WASTE INDUSTRY?
A. Yes. As the industry has matured, companies have focused more on
pricing, customer relations, service, marketing and managing the mix of the
waste they handle. I think WMX in 1995 and 1996 could generate higher cash
flow that it can use to pay down debt. That debt reduction should help it
increase earnings and, hopefully, help its stock price. As it stands now,
WMX's performance makes it difficult for similar but smaller companies such
as Browning-Ferris Industries to attract investor interest by virtue of
positive earnings surprises, especially if their stocks trade at higher
prices than that of WMX. Another factor that could help refuse systems
companies going forward is the opportunity to secure municipal waste
contracts factored on a price-per-house or per-site basis. At times when
the economy slows down, the amount of waste produced per household usually
declines. Since the companies would be paid per household, their earnings
wouldn't drop along with the amount of trash.
Q. WHAT CAN YOU TELL US ABOUT YOUR RECENT INVESTMENT STRATEGIES?
A. I've tried to focus on companies with exposure to international growth
opportunities, such as Thermedics, an instrumentation company. Thermedics
was the fund's largest position at the end of February and it has generated
about 40% of its revenues abroad. I've also added some companies with late
cyclical engineering and construction exposure, such as Fluor Corporation.
Q. AND WHAT ABOUT POSITIVE CONTRIBUTORS?
A. TETRA Technologies continues to deliver impressive results. This company
takes chemical waste and converts it to fluids used for oil and gas
drilling. It also is entering the agricultural fertilizer market, which
should increase its earnings even more. The GNI Group is another, even
though earlier in the year the stock suffered when one of the company's
deep well injection systems failed. The company has great visibility and
was picking up a lot of business that Chem Waste, a WMX company, used to
have.
Q. WHAT'S YOUR OUTLOOK?
A. I'm positive about the prospects for individual companies, especially in
the solid waste area, but a lot depends on what happens with cyclical
stocks in the broader market, because the sector - as well as most
cyclicals - probably will be affected by broad market sentiment about the
condition of the economy. I'll continue to focus on solid waste companies,
looking to add to positions in some of the larger companies, such as
Browning-Ferris, when their stock prices become attractive.
FUND FACTS
START DATE: June 29, 1989
SIZE: as of February 28, 1995, more than
$31 million
MANAGER: Philip Barton, since 1993; manager,
Fidelity Select Developing Communications,
1993; senior European technology analyst,
Fidelity International, London, 1989-1993; joined
Fidelity in 1986
(checkmark)
ENVIRONMENTAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.8%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 1.8%
AUTO & TRUCK PARTS - 1.8%
Williams Controls, Inc. (a) 148,000 $ 550,371 96946510
BUILDING MATERIALS - 1.8%
AIRCONDITIONING EQUIPMENT - 0.3%
Thermo Power Corp. (a) 9,100 92,138 88358910
FURNACES - 1.5%
Thermo Process Systems, Inc. (a) 12,900 103,200 88359010
Thermo Remediation 19,500 348,563 88359210
451,763
TOTAL BUILDING MATERIALS 543,901
COMPUTER SERVICES & SOFTWARE - 0.6%
PREPACKAGED COMPUTER SOFTWARE - 0.6%
Telepanel Systems, Inc. (a) 121,500 201,108 87943U20
DRUGS & PHARMACEUTICALS - 1.2%
COMMERCIAL LABORATORY RESEARCH - 1.2%
Thermotrex Corp. (a) 11,000 155,375 88366610
Zenon Environmental, Inc. (a) 44,000 229,571 98942B10
384,946
ELECTRIC UTILITY - 0.1%
ELECTRIC POWER - 0.1%
Thermo Ecotek (a) 1,662 21,191 88355R10
ELECTRICAL EQUIPMENT - 2.1%
TV & RADIO COMMUNICATION EQUIPMENT - 2.1%
California Amplifier, Inc. (a) 99,300 645,450 12990010
ELECTRONIC INSTRUMENTS - 7.3%
INDUSTRIAL MEASUREMENT INSTRUMENTS - 2.2%
TSI, Inc. 73,800 682,650 87287610
LABORATORY & RESEARCH EQUIPMENT - 3.1%
Microfluidics International Corp. (a) 243,300 942,788 59507310
MEASURING INSTRUMENTS - 2.0%
Liberty Technologies, Inc. (a) 149,900 618,338 53128110
TOTAL ELECTRONIC INSTRUMENTS 2,243,776
ENERGY SERVICES - 1.8%
OIL & GAS SERVICES - 1.8%
Serv-Tech, Inc. (a) 68,400 555,750 81753910
ENGINEERING - 5.1%
ARCHITECTS & ENGINEERS - 5.1%
EA Engineering Science &
Technology, Inc. (a) 58,300 342,513 26791110
Fluor Corp. 25,000 1,218,750 34386110
1,561,263
INDEPENDENT POWER - 4.1%
STEAM SUPPLY - 4.1%
Thermo Electron Corp. (a) 26,550 1,257,806 88355610
INDUSTRIAL MACHINERY & EQUIPMENT - 2.5%
MEASURING & DISPENSING PUMPS - 0.4%
Total Containment, Inc. (a) 17,500 135,625 89149T10
SERVICE INDUSTRY MACHINERY - 2.1%
Trojan Technologies. Inc. (a) 106,400 650,858 89692410
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 786,483
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 11.4%
MEDICAL TECHNOLOGY - 11.4%
Thermedics, Inc. (a) 237,400 $ 3,501,650 88390110
MEDICAL FACILITIES MANAGEMENT - 0.6%
MEDICAL LABORATORIES - 0.6%
Huntingdon International Holdings
PLC ADR 53,000 192,125 44589120
METALS & MINING - 3.3%
SECONDARY NONFERROUS SMELTING - 3.3%
IMCO Recycling, Inc. 68,400 1,017,450 44968110
POLLUTION CONTROL - 49.9%
HAZARDOUS WASTE MANAGEMENT - 8.7%
American Ecology Corp. 107,800 687,225 02553310
GNI Group, Inc. (a) 130,000 715,000 36202210
International Technology Corp. (a) 32,300 88,825 46046510
OHM Corp. (a) 20,900 148,913 67083910
TRC Companies, Inc. (a) 118,100 1,033,375 87262510
2,673,338
POLLUTION EQUIPMENT & DESIGN - 14.3%
Davis Water & Waste Industries, Inc. 21,900 194,363 23913310
GZA GeoEnvironmental
Technologies, Inc. (a) 47,100 141,300 36238610
Harding Associates, Inc. (a) 52,300 313,800 41226410
MFRI, Inc. (a) 75,700 340,650 55272110
Sevenson Environmental Services, Inc. 36,900 599,625 81806310
TETRA Technologies, Inc. (a) 230,900 2,539,900 88162F10
TETRA Technologies, Inc. (New) (a) 15,000 285,000 88162G10
4,414,638
REFUSE SYSTEMS - 26.9%
Biomedical Waste Systems, Inc. (a) 70,000 100,625 09061E10
Browning-Ferris Industries, Inc. 62,600 1,948,425 11588510
Chambers Development Co., Inc.
Class A (a) 219,200 904,200 15782920
Continental Waste Industries, Inc. (a) 37,500 398,438 21215T10
Rollins Environmental Services, Inc. (a) 20,000 102,500 77570910
Sanifill, Inc. (a) 10,600 250,425 80101810
United Waste Systems, Inc. (a) 70,100 1,840,125 91317410
WMX Technologies, Inc. 50,000 1,318,750 92929Q10
Western Waste Industries, Inc. (a) 37,800 614,250 95988010
Wheelabrator Technologies, Inc. 59,100 812,625 96290130
8,290,363
TOTAL POLLUTION CONTROL 15,378,339
SERVICES - 5.2%
BUSINESS CONSULTING SERVICES - 5.2%
Earth Technology Corp. (USA) (a) 42,100 273,650 27031510
Heidemij NV 140,500 1,334,750 42099522
1,608,400
TOTAL COMMON STOCKS
(Cost $32,849,827) 30,450,009
REPURCHASE AGREEMENTS - 1.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08%
dated 2/28/95 due 3/1/95 $380,064 $ 380,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $33,229,827) $ 30,830,009
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $35,878,084 and $62,701,255, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $44,929 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,682,000 and $1,323,417,
respectively. The weighted average interest rate paid was 4.6% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $33,413,045. Net unrealized depreciation aggregated
$2,583,036, of which $2,049,277 related to appreciated investment
securities and $4,632,313 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending February 28, 1996
$3,161,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
ENVIRONMENTAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $380,000) (cost $33,229,827) - See $ 30,830,009
accompanying schedule
Cash 84
Receivable for investments sold 865,448
Receivable for fund shares sold 21,199
Dividends receivable 8,949
Redemption fees receivable 106
Other receivables 63,421
TOTAL ASSETS 31,789,216
LIABILITIES
Payable for fund shares redeemed $ 449,456
Accrued management fee 16,635
Other payables and accrued expenses 52,813
TOTAL LIABILITIES 518,904
NET ASSETS $ 31,270,312
Net Assets consist of:
Paid in capital $ 36,965,983
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (3,295,853
)
Net unrealized appreciation (depreciation) on investments (2,399,818
)
NET ASSETS, for 3,045,636 $ 31,270,312
shares outstanding
NET ASSET VALUE and redemption price per share ($31,270,312 (divided by) 3,045,636 shares) $10.27
Maximum offering price per share (100/97.00 of $10.27) $10.59
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 243,027
Dividends
Interest 68,017
TOTAL INCOME 311,044
EXPENSES
Management fee $ 277,824
Transfer agent 574,348
Fees
Redemption fees (48,314
)
Accounting fees and expenses 49,038
Non-interested trustees' compensation 1,695
Custodian fees and expenses 16,113
Registration fees 16,452
Audit 21,980
Legal 809
Interest 2,023
Reports to shareholders 5,182
Miscellaneous 413
Total expenses before reductions 917,563
Expense reductions (11,050 906,513
)
NET INVESTMENT INCOME (LOSS) (595,469
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (2,723,515
)
Foreign currency transactions 35 (2,723,480
)
Change in net unrealized appreciation (depreciation) on investment securities (5,250,926
)
NET GAIN (LOSS) (7,974,406
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (8,569,875
)
OTHER INFORMATION $97,853
Sales Charges Paid to FDC
Deferred sales charges withheld $24,202
by FDC
Exchange fees withheld by FSC $37,282
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (595,469 $ (575,756
Net investment income (loss) ) )
Net realized gain (loss) (2,723,480 1,694,174
)
Change in net unrealized appreciation (depreciation) (5,250,926 1,070,736
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (8,569,875 2,189,154
)
Share transactions 27,529,233 46,687,197
Net proceeds from sales of shares
Cost of shares redeemed (53,674,761 (48,886,268
) )
Paid in capital portion of redemption fees 29,932 53,169
Net increase (decrease) in net assets resulting from share transactions (26,115,596 (2,145,902
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (34,685,471 43,252
)
NET ASSETS
Beginning of period 65,955,783 65,912,531
End of period $ 31,270,312 $ 65,955,783
OTHER INFORMATION
Shares
Sold 2,591,147 4,126,128
Redeemed (5,072,812 (4,401,687
) )
Net increase (decrease) (2,481,665) (275,559)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.93 $ 11.36 $ 11.39 $ 12.95 $ 11.41
Income from Investment Operations
Net investment income (loss) (.14) (.11) (.06) (.09) (.04)
Net realized and unrealized gain (loss) (1.53) .67 .42 (1.06) 1.55
Total from investment operations (1.67) .56 .36 (1.15) 1.51
Less Distributions
From net realized gain - - (.39) (.42) -
Total distributions - - (.39) (.42) -
Redemption fees added to paid in capital .01 .01 - .01 .03
Net asset value, end of period $ 10.27 $ 11.93 $ 11.36 $ 11.39 $ 12.95
TOTAL RETURN B, C (13.91)% 5.02% 3.34% (8.67)% 13.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 31,270 $ 65,956 $ 65,913 $ 65,132 $ 100,263
Ratio of expenses to average net assets 2.01% 2.03% 1.99% A 2.03% 2.03%
Ratio of expenses to average net assets before expense reductions 2.04% 2.07% 1.99% A 2.03% 2.03%
Ratio of net investment income (loss) to average net assets (1.32)% (1.02)% (.70)% (.74)% (.30)%
A
Portfolio turnover rate 82% 191% 176% A 130% 122%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNSWOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
INDUSTRIAL EQUIPMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT -1.93% 77.84% 115.54%
INDUSTRIAL EQUIPMENT
(INCL. 3% SALES CHARGE) -4.87% 72.50% 109.07%
S&P 500 7.36% 71.20% 175.04%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on September 29, 1986. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
INDUSTRIAL EQUIPMENT -1.93% 12.20% 9.54%
INDUSTRIAL EQUIPMENT
(INCL. 3% SALES CHARGE) -4.87% 11.52% 9.15%
S&P 500 7.36% 11.35% 12.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Industrial EqStandard & Poor's 50
09/29/86 9700.00 10000.00
09/30/86 9729.10 9962.80
10/31/86 10039.50 10537.66
11/30/86 10291.70 10793.72
12/31/86 10311.10 10518.48
01/31/87 11804.90 11935.32
02/28/87 12804.00 12406.77
03/31/87 12580.90 12765.32
04/30/87 12367.50 12651.71
05/31/87 12357.80 12761.78
06/30/87 12707.00 13406.25
07/31/87 13483.00 14085.95
08/31/87 14084.40 14611.35
09/30/87 14414.20 14291.37
10/31/87 8759.10 11213.00
11/30/87 8361.40 10289.05
12/31/87 9357.40 11072.05
01/31/88 9188.17 11538.18
02/29/88 10024.36 12075.86
03/31/88 10173.68 11702.72
04/30/88 10472.32 11832.62
05/31/88 10412.60 11935.56
06/30/88 11149.24 12483.41
07/31/88 10561.92 12435.97
08/31/88 9606.27 12013.15
09/30/88 9785.45 12524.91
10/31/88 9626.18 12873.10
11/30/88 9317.58 12689.01
12/31/88 9815.31 12911.07
01/31/89 10532.05 13856.16
02/28/89 10113.95 13511.14
03/31/89 10263.28 13825.95
04/30/89 10999.92 14543.52
05/31/89 11597.20 15132.53
06/30/89 11099.47 15046.28
07/31/89 11806.25 16404.95
08/31/89 12025.25 16726.49
09/30/89 11856.02 16657.91
10/31/89 11069.60 16271.45
11/30/89 11378.20 16603.39
12/31/89 11577.29 17001.87
01/31/90 11189.06 15861.04
02/28/90 11756.48 16065.65
03/31/90 12453.30 16491.39
04/30/90 12353.76 16079.11
05/31/90 13498.55 17646.82
06/30/90 13258.63 17526.82
07/31/90 13008.09 17470.73
08/31/90 10863.46 15891.38
09/30/90 9390.28 15117.47
10/31/90 9139.74 15052.46
11/30/90 9440.38 16024.85
12/31/90 9781.12 16471.95
01/31/91 10823.37 17190.12
02/28/91 11845.58 18419.22
03/31/91 11745.36 18864.96
04/30/91 11625.10 18910.24
05/31/91 12116.16 19727.16
06/30/91 11725.01 18823.66
07/31/91 11825.31 19700.84
08/31/91 12005.85 20167.75
09/30/91 12286.69 19830.95
10/31/91 12216.48 20096.68
11/30/91 11634.74 19286.79
12/31/91 12406.41 21493.19
01/31/92 13519.55 21093.42
02/29/92 14480.89 21367.64
03/31/92 14055.87 20950.97
04/30/92 14055.87 21566.92
05/31/92 14167.19 21672.60
06/30/92 13296.92 21349.68
07/31/92 13418.35 22222.88
08/31/92 12720.11 21767.31
09/30/92 12983.22 22024.17
10/31/92 12932.62 22101.25
11/30/92 13549.90 22854.91
12/31/92 13813.01 23136.02
01/31/93 14460.65 23330.36
02/28/93 15219.61 23647.66
03/31/93 15492.83 24146.62
04/30/93 16201.66 23562.27
05/31/93 17011.75 24193.74
06/30/93 17234.52 24263.90
07/31/93 17477.55 24166.85
08/31/93 18672.42 25082.77
09/30/93 18459.77 24889.63
10/31/93 19077.46 25404.85
11/30/93 19057.21 25163.50
12/31/93 19798.03 25467.98
01/31/94 20728.98 26333.89
02/28/94 21318.57 25620.25
03/31/94 20087.66 24503.20
04/30/94 19905.86 24816.84
05/31/94 19498.98 25223.84
06/30/94 18497.43 24605.86
07/31/94 19373.78 25412.93
08/31/94 20750.92 26454.86
09/30/94 20813.52 25806.71
10/31/94 21074.34 26387.37
11/30/94 20051.92 25426.34
12/31/94 20417.07 25803.41
01/31/95 20302.31 26472.49
02/28/95 20907.41 27504.13
Let's say you invested $10,000 in Fidelity Select Industrial Equipment
Portfolio on September 29, 1986, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $20,907 -
a 109.07% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $27,504 over the same period - a 175.04% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Deere & Co. 8.3
Caterpillar, Inc. 8.2
Parker-Hannifin Corp. 5.0
Clark Equipment Co. 4.7
Harnischfeger Industries, Inc. 4.6
International Business Machines Corp. 4.6
Cooper Industries, Inc. 4.5
Case Corp. 4.0
Goulds Pumps, Inc. 3.8
Trinity Industries, Inc. 3.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 30.4
Row: 1, Col: 2, Value: 5.5
Row: 1, Col: 3, Value: 6.9
Row: 1, Col: 4, Value: 13.6
Row: 1, Col: 5, Value: 15.3
Row: 1, Col: 6, Value: 28.3
General Industrial Machinery 28.3%
Construction Equipment 15.3%
Farm Machinery &
Equipment 13.6%
Pumping Equipment 6.9%
Semiconductors 5.5%
All Others 30.4%*
* INCLUDES SHORT-TERM INVESTMENTS
INDUSTRIAL EQUIPMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Robert Bertelson,
Portfolio Manager
of Fidelity Select
Industrial Equipment Portfolio
Q. HOW HAS THE FUND PERFORMED, BOB?
A. For the 12 months ended February 28, 1995, the fund had a total return
of -1.93%, lagging the S&P 500, which returned 7.36% for the same period.
Q. WHAT ACCOUNTED FOR THE FUND'S PERFORMANCE?
A. Despite the fact that many of the companies in the sector showed strong
earnings growth, their stocks have been seen as highly cyclical, or
susceptible to the health of the economy. Investors were concerned that the
regular increases in short-term interest rates instituted by the Federal
Reserve Board during 1994 would cause a slowdown in the domestic economic
picture. As a result, stock prices in the sector went down.
Q. CAN YOU GIVE SOME EXAMPLES OF COMPANIES THAT WERE SHOWING STRONG
EARNINGS GROWTH, BUT WERE BUFFETED BY THIS NEGATIVE SENTIMENT?
A. Caterpillar is a perfect case in point. The company's stock was a strong
performer during 1994, because of strong earnings growth due to robust
sales growth and solid returns from the company's investment in automation
and manufacturing process. However, the stock recently has fallen victim to
economic concerns. Clark Equipment is another example. Over the past
several years, the company has been selling weaker divisions and buying
businesses that are more similar to its core business, Melroe, a company
that has about a 50% market share in small tractors and other equipment
used by contractors. Clark's stock has gone down steadily since the fourth
quarter of 1994 as a result of recessionary fears.
Q. GIVEN THIS TYPE OF BACKDROP, HOW ARE YOU FOCUSING THE FUND'S
INVESTMENTS?
A. I'm targeting several different areas. The first is agricultural
equipment. This industry also had a poor 1994 in terms of stock
performance, despite good earnings performance. Again, this was due to
concerns about the economy, as well as a feeling that Republican
congressional victories in November would lead to changes in the Farm Bill
- - which is up for its five-year review in 1995 - and cuts in farm subsidy
programs. On the positive side, there are several factors that could help
companies such as Deere. First, farmers are in a better financial position
than they've been in for a while. One of the reasons is a boom in
agricultural exports. This growth can have a powerful impact on companies
such as Deere, and I believe the market will recognize this opportunity
more fully by the end of 1995.
Q. WHAT ARE THE OTHER AREAS?
A. One is companies that have a large international exposure, on my belief
that the economic recovery in Europe is about one year behind that of the
U.S. I also expect companies with exposure to the Far East to do well,
because those countries are making substantial infrastructure investments.
Another area is highly diversified companies like Dover Corp., a general
industrial machinery manufacturer. Its diversity should allay investor
fears that the company's earnings will tumble because of an economic
downturn. Finally, I've added to the fund's technology investments -
including semiconductor manufacturers Intel and Motorola - because they can
benefit from the move toward increasing industrial productivity. I am
reducing investments in companies that are linked to parts of the economy
that usually do well early in an economic recovery, such as housing or auto
production. While many stocks related to these industries seem somewhat
cheap, they may remain so due to investor concerns that autos and housing
are at cyclical highs, and may stay flat or even fall.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Although I feel we'll probably see one or two more interest rate
increases by the Fed, I think stock prices, for the most part, already
reflect this possibility. I believe companies whose products improve other
companies' productivity or capacity should do well irrespective of higher
interest rates. If investors become convinced that the Fed has slowed the
rate of growth - but not too much - industrial equipment companies that
continue to show strong earnings growth could attract interest and see
their stock prices rebound. The one wild card is emerging markets. If there
are other countries such as Mexico, where currencies are vulnerable to
devaluation, that could knock the legs out of earnings growth for some of
the fund's companies that do business in these countries. If that happens,
I'll have to reassess my strategy.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1995, more than
$109 million
MANAGER: Robert Bertelson, since December
1994; manager, Fidelity Select Energy
Portfolio, 1992 to December 1994; equity
analyst, since 1991; joined Fidelity in 1991
(checkmark)
INDUSTRIAL EQUIPMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.0%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 5.9%
AUTO & TRUCK PARTS - 2.3%
Titan Wheel International, Inc. 91,700 $ 2,579,063 88832810
INDUSTRIAL TRUCKS - 2.7%
NACCO Industries, Inc. Class A 57,600 2,959,200 62957910
MOTOR VEHICLES & CAR BODIES - 0.9%
Spartan Motors, Inc. 86,500 1,048,813 84681910
TOTAL AUTOS, TIRES, & ACCESSORIES 6,587,076
BUILDING MATERIALS - 2.4%
AIRCONDITIONING EQUIPMENT - 2.4%
Tecumseh Products Co. Class A 58,200 2,720,848 87889520
COMPUTERS & OFFICE EQUIPMENT - 4.5%
MAINFRAME COMPUTERS - 4.5%
International Business Machines Corp. 66,700 5,019,175 45920010
ELECTRICAL EQUIPMENT - 1.0%
ELECTRICAL MACHINERY - 1.0%
General Electric Co. 20,000 1,097,500 36960410
ELECTRONICS - 5.5%
SEMICONDUCTORS - 5.5%
Intel Corp. 40,000 3,190,000 45814010
Motorola, Inc. 50,000 2,875,000 62007610
6,065,000
ENGINEERING - 0.8%
ARCHITECTS & ENGINEERS - 0.8%
Corrpro Companies, Inc. (a) 54,000 904,500 22031710
HOLDING COMPANIES - 0.1%
HOLDING COMPANY OFFICES - 0.1%
Brierley Investments Ltd. 143,106 103,456 10901410
INDUSTRIAL MACHINERY & EQUIPMENT - 71.5%
BALL & ROLLER BEARINGS - 1.5%
Bearings, Inc. 58,100 1,648,588 07400520
CONSTRUCTION & MINING EQUIPMENT - 0.2%
Champion Road Machinery Ltd. (b) 22,800 184,592 15864C92
CONSTRUCTION EQUIPMENT - 15.3%
Astec Industries, Inc. (a) 90,600 1,200,450 04622410
Caterpillar, Inc. 177,400 9,158,275 14912310
Clark Equipment Co. (a) 96,600 5,168,100 18139610
Finning Ltd. 117,300 1,508,933 31807140
17,035,758
FARM MACHINERY & EQUIPMENT - 13.6%
AGCO Corp. 50,000 1,293,750 00108410
Allied Products Corp. (a) 30,000 483,750 01941110
Case Corp. 178,800 4,179,450 14743R10
Deere & Co. 120,000 9,195,000 24419910
15,151,950
GENERAL INDUSTRIAL MACHINERY - 28.3%
Commercial Intertech Corp. 60,000 1,260,000 20170910
Cooper Industries, Inc. 112,900 4,431,325 21666910
Dover Corp. 60,000 3,570,000 26000310
Harnischfeger Industries, Inc. 183,717 5,121,111 41334510
Illinois Tool Works, Inc. 63,400 2,845,075 45230810
Ingersoll-Rand Co. 30,000 956,250 45686610
Park Ohio Industries, Inc. (a) 203,300 2,795,375 70067710
Parker-Hannifin Corp. 110,800 5,179,900 70109410
Regal-Beloit Corp. 152,800 2,387,500 75875010
Scottsman Industries, Inc. 43,000 768,625 80934010
TRINOVA Corp. 78,200 2,111,400 89667810
31,426,561
SHARES VALUE (NOTE 1)
MACHINE TOOLS, METAL CUTTING - 3.9%
Cincinnati Milacron, Inc. 113,400 $ 2,381,400 17217210
Giddings & Lewis, Inc. 60,000 1,020,000 37504810
Greenfield Industries, Inc. 36,800 947,600 39505810
4,349,000
PUMPING EQUIPMENT - 6.9%
Amtrol, Inc. 30,200 490,750 03234A10
Duriron Company, Inc. 41,050 769,688 26684910
Goulds Pumps, Inc. 191,700 4,121,550 38355010
IDEX Corp. 49,800 1,444,200 45167R10
Keystone International, Inc. 48,000 894,000 49350310
7,720,188
SPECIAL INDUSTRIAL MACHINERY - 1.8%
CMI Corp. Class A (a) 295,600 1,995,300 12576130
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 79,511,937
RAILROADS - 3.3%
RAILROAD EQUIPMENT - 3.3%
Trinity Industries, Inc. 110,450 3,672,463 89652210
TOTAL COMMON STOCKS
(Cost $106,107,744) 105,681,955
REPURCHASE AGREEMENTS - 5.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $5,604,946 5,604,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $111,711,744) $ 111,285,955
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $184,592 or 0.2% of net assets.
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Rexworks, Inc. (a) $ - $ 63,125 $ - $ -
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $142,065,124 and $177,145,280, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $59,687 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $3,887,000 and $2,095,235,
respectively. The weighted average interest rate paid was 4.5% (see Note 8
of Notes to Financial Statements.
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $111,815,237. Net unrealized depreciation
aggregated $529,282, of which $6,801,412 related to appreciated investment
securities and $7,330,694 related to depreciated investment securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $907,000 which will expire on February 28, 2003.
On October 26, 1990, the fund acquired all of the assets of Automation and
Machinery Portfolio in a tax-free exchange for shares of Industrial
Equipment Portfolio. Automation and Machinery Portfolio has a capital loss
carryover of approximately $106,000 available to offset future realized
capital gains in Industrial Equipment Portfolio, to the extent provided by
regulations.
The fund has elected to defer to its fiscal year ending February 28, 1996
$412,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
INDUSTRIAL EQUIPMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $5,604,000) (cost $111,711,744) - See $ 111,285,955
accompanying schedule
Cash 1,717
Receivable for investments sold 125,988
Receivable for fund shares sold 337,121
Dividends receivable 171,691
Redemption fees receivable 280
TOTAL ASSETS 111,922,752
LIABILITIES
Payable for fund shares redeemed $ 1,802,952
Accrued management fee 58,138
Other payables and accrued expenses 93,724
TOTAL LIABILITIES 1,954,814
NET ASSETS $ 109,967,938
Net Assets consist of:
Paid in capital $ 111,872,772
Undistributed net investment income 45,655
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (1,524,715
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies (425,774
)
NET ASSETS, for 5,488,500 shares outstanding $ 109,967,938
NET ASSET VALUE and redemption price per share ($109,967,938 (divided by) 5,488,500 shares) $20.04
Maximum offering price per share (100/97.00 of $20.04) $20.66
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 1,690,474
Dividends
Interest 588,001
TOTAL INCOME 2,278,475
EXPENSES
Management fee $ 767,043
Transfer agent 1,326,962
Fees
Redemption fees (160,840
)
Accounting fees and expenses 123,986
Non-interested trustees' compensation 878
Custodian fees and expenses 15,778
Registration fees 121,642
Audit 24,424
Legal 1,746
Interest 4,453
Reports to shareholders 6,654
Miscellaneous 913
Total expenses before reductions 2,233,639
Expense reductions (34,799 2,198,840
)
NET INVESTMENT INCOME 79,635
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including (1,498,705
realized gain of $11,876 on )
sales of investments in affiliated
issuers)
Foreign currency transactions (241 (1,498,946
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities (14,341,012
)
Assets and liabilities in foreign currencies 15 (14,340,997
)
NET GAIN (LOSS) (15,839,943
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (15,760,308
)
OTHER INFORMATION $1,442,065
Sales Charges Paid to FDC
Deferred sales charges withheld $6,353
by FDC
Exchange fees withheld by FSC $131,303
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 79,635 $ 5,878
Net investment income
Net realized gain (loss) (1,498,946 6,549,137
)
Change in net unrealized appreciation (depreciation) (14,340,997 13,055,339
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (15,760,308 19,610,354
)
Distributions to shareholders: (37,665 (9,388
From net investment income ) )
From net realized gain (1,765,984 (1,748,414
) )
TOTAL DISTRIBUTIONS (1,803,649 (1,757,802
) )
Share transactions 154,753,559 267,189,015
Net proceeds from sales of shares
Reinvestment of distributions 1,784,486 1,738,476
Cost of shares redeemed (235,232,664 (95,571,492
) )
Paid in capital portion of redemption fees 214,170 202,432
Net increase (decrease) in net assets resulting from share transactions (78,480,449 173,558,431
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (96,044,406 191,410,983
)
NET ASSETS
Beginning of period 206,012,344 14,601,361
End of period (including undistributed net investment income of $45,655 and $3,928, respectively) $ 109,967,938 $ 206,012,344
OTHER INFORMATION
Shares
Sold 7,719,747 14,282,723
Issued in reinvestment of distributions 90,354 93,575
Redeemed (12,319,237 (5,349,531
) )
Net increase (decrease) (4,509,136) 9,026,767
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.61 $ 15.04 $ 13.89 $ 11.60 $ 12.41
Income from Investment Operations
Net investment income (loss) .01 - .02 (.07) .01
Net realized and unrealized gain (loss) (.44) 5.92 1.09 2.39 (.80)
Total from investment operations (.43) 5.92 1.11 2.32 (.79)
Less Distributions (.01) E (.01) - - -
From net investment income
In excess of net investment income - - - (.11) (.09)
From net realized gain (.16) E (.40) - - -
Total distributions (.17) (.41) - (.11) (.09)
Redemption fees added to paid in capital .03 .06 .04 .08 .07
Net asset value, end of period $ 20.04 $ 20.61 $ 15.04 $ 13.89 $ 11.60
TOTAL RETURN B, C (1.93)% 40.07% 8.28% 20.91% (5.90)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 109,968 $ 206,012 $ 14,601 $ 7,529 $ 1,949
Ratio of expenses to average net assets 1.78% 1.68% 2.49% A 2.49% 2.52%
Ratio of expenses to average net assets before expense reductions 1.80% 1.69% 3.40% A 2.86% 2.99%
Ratio of net investment income (loss) to average net assets .06% .01% .15% A (.57)% .09%
Portfolio turnover rate 131% 95% 407% A 167% 43%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
INDUSTRIAL MATERIALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
INDUSTRIAL MATERIALS 7.65% 86.13% 146.97%
INDUSTRIAL MATERIALS
(INCL. 3% SALES CHARGE) 4.42% 80.55% 139.56%
S&P 500 7.36% 71.20% 175.04%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on September 29, 1986. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
INDUSTRIAL MATERIALS 7.65% 13.23% 11.33%
INDUSTRIAL MATERIALS
(INCL. 3% SALES CHARGE) 4.42% 12.54% 10.93%
S&P 500 7.36% 11.35% 12.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Industrial MaStandard & Poor's 50
09/29/86 10000.00 10000.00
09/30/86 10030.00 9962.80
10/31/86 10580.00 10537.66
11/30/86 10950.00 10793.72
12/31/86 10550.00 10518.48
01/31/87 12380.00 11935.32
02/28/87 13420.00 12406.77
03/31/87 14390.00 12765.32
04/30/87 14560.00 12651.71
05/31/87 14190.00 12761.78
06/30/87 14930.00 13406.25
07/31/87 16310.00 14085.95
08/31/87 16870.00 14611.35
09/30/87 17120.00 14291.37
10/31/87 10620.00 11213.00
11/30/87 10570.00 10289.05
12/31/87 12201.02 11072.05
01/31/88 11569.42 11538.18
02/29/88 12932.88 12075.86
03/31/88 13163.47 11702.72
04/30/88 13183.52 11832.62
05/31/88 12862.70 11935.56
06/30/88 14266.27 12483.41
07/31/88 13734.92 12435.97
08/31/88 12993.04 12013.15
09/30/88 13103.32 12524.91
10/31/88 12862.70 12873.10
11/30/88 12742.40 12689.01
12/31/88 13523.13 12911.07
01/31/89 14338.39 13856.16
02/28/89 13716.75 13511.14
03/31/89 13574.08 13825.95
04/30/89 13991.90 14543.52
05/31/89 14175.33 15132.53
06/30/89 13349.88 15046.28
07/31/89 14552.39 16404.95
08/31/89 15714.14 16726.49
09/30/89 14756.21 16657.91
10/31/89 13543.51 16271.45
11/30/89 13737.13 16603.39
12/31/89 14124.38 17001.87
01/31/90 13044.16 15861.04
02/28/90 13268.36 16065.65
03/31/90 13655.61 16491.39
04/30/90 12667.10 16079.11
05/31/90 13431.41 17646.82
06/30/90 13288.86 17526.82
07/31/90 13132.03 17470.73
08/31/90 11615.99 15891.38
09/30/90 10790.01 15117.47
10/31/90 10664.55 15052.46
11/30/90 11229.14 16024.85
12/31/90 11699.64 16471.95
01/31/91 12117.85 17190.12
02/28/91 13006.57 18419.22
03/31/91 13184.31 18864.96
04/30/91 13205.22 18910.24
05/31/91 14334.41 19727.16
06/30/91 14177.52 18823.66
07/31/91 14744.63 19700.84
08/31/91 15091.19 20167.75
09/30/91 14891.65 19830.95
10/31/91 15532.27 20096.68
11/30/91 14293.05 19286.79
12/31/91 15889.33 21493.19
01/31/92 16582.45 21093.42
02/29/92 17391.10 21367.64
03/31/92 17086.54 20950.97
04/30/92 17979.20 21566.92
05/31/92 18189.24 21672.60
06/30/92 17747.74 21349.68
07/31/92 18147.04 22222.88
08/31/92 17001.69 21767.31
09/30/92 16770.51 22024.17
10/31/92 16959.65 22101.25
11/30/92 17590.12 22854.91
12/31/92 17854.64 23136.02
01/31/93 18234.53 23330.36
02/28/93 18403.37 23647.66
03/31/93 18709.39 24146.62
04/30/93 18435.03 23562.27
05/31/93 19194.80 24193.74
06/30/93 19247.22 24263.90
07/31/93 19511.90 24166.85
08/31/93 20020.07 25082.77
09/30/93 19395.44 24889.63
10/31/93 20538.84 25404.85
11/30/93 20814.10 25163.50
12/31/93 21671.65 25467.98
01/31/94 23429.10 26333.89
02/28/94 22942.09 25620.25
03/31/94 22296.29 24503.20
04/30/94 23133.16 24816.84
05/31/94 23366.61 25223.84
06/30/94 23122.55 24605.86
07/31/94 23982.08 25412.93
08/31/94 25276.69 26454.86
09/30/94 24958.34 25806.71
10/31/94 24629.38 26387.37
11/30/94 22889.09 25426.34
12/31/94 23447.39 25803.41
01/31/95 22785.40 26472.49
02/28/95 24696.64 27504.13
Let's say you invested $10,000 in Fidelity Select Industrial Materials
Portfolio on September 29, 1986, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $23,956 -
a 139.56% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $27,504 over the same period - a 175.04% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Stone Container Corp. 13.1
Aluminum Co. of America 9.7
Reynolds Metals Co. 8.8
Union Carbide Corp. 8.6
Temple-Inland, Inc. 8.3
Alcan Aluminium Ltd. 4.8
Amerada Hess Corp. 4.6
Bowater, Inc. 4.3
Great Lakes Chemical Corp. 4.3
British Petroleum PLC ADR 3.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 32.3
Row: 1, Col: 2, Value: 8.699999999999999
Row: 1, Col: 3, Value: 8.800000000000001
Row: 1, Col: 4, Value: 12.0
Row: 1, Col: 5, Value: 14.5
Row: 1, Col: 6, Value: 23.7
Paper 23.7%
Prime Nonferrous Smelting 14.5%
Chemicals 12.0%
Primary Production
of Aluminum 8.8%
Oil & Gas Exploration 8.7%
All Others 32.3%*
* INCLUDES SHORT-TERM INVESTMENTS
INDUSTRIAL MATERIALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Doug Chase,
Portfolio Manager of Fidelity Select Industrial Materials Portfolio
Q. DOUG, HOW HAS THE FUND PERFORMED?
A. Pretty well. The fund was up 7.65% for the year ended February 28, 1995,
slightly ahead of the S&P 500, which returned 7.36% for the same period.
Q. WHY DID THE FUND PERFORM SO WELL?
A. Industrial materials companies saw big price increases in 1994,
propelling stock prices upward. When the Federal Reserve continued to raise
interest rates in late 1994 and early 1995, investors started moving out of
cyclical stocks -ones that rise and fall with the economy - to growth
stocks. This exodus from all cyclicals hurt the fund - which is largely
made up of cyclical stocks. In light of this, I've chosen to invest in
sectors where I expect profits to continue to increase and be much less
sensitive to overall economic conditions.
Q. SPECIFICALLY, IN WHAT AREAS DID YOU FIND INVESTMENT OPPORTUNITIES?
A. When I took over the fund in November, one of the first things I did was
increase the fund's holdings in aluminum. I believe that aluminum stocks
are poised to outperform the overall market going forward. Let me explain.
During the past few years, Russian aluminum manufacturers have flooded the
market. Western aluminum manufacturers have reacted to all-time low real
prices for aluminum by curtailing capacity. Also, new plant construction
hasn't begun in any significant fashion. North American producers such as
Aluminum Company of American (Alcoa), Alcan Aluminum and Reynolds have
aggressively cut costs to remain competitive. In short, North American
producers' business prospects for the next few years look good but the
stock prices are still acting as if the they've reached the end of the
earnings cycle. I don't think they have.
Q. WHAT ABOUT INTEREST RATES? IF THEY CONTINUE TO RISE, WON'T IT HURT THESE
COMPANIES?
A. Yes, but remember, the U.S. is only about 25% - 30% of world GNP. If the
U.S. economy slows down, as some believe it will, we'll still see good
global demand for aluminum. In other words, if demand in the U.S. plummets,
it won't hurt global commodity companies as much as those geared solely to
U.S. markets.
Q. WHY NOT OWN MORE INTERNATIONAL ALUMINUM STOCKS?
A. Pricing for North American aluminum manufacturers relies on world supply
and demand for the commodity. With help from the decline in the dollar and
cutting costs, North American companies are manufacturing more cheaply than
companies abroad. Also, companies in the U.S. and Canada sell products all
over the world.
Q. WHERE ELSE HAVE YOU MADE STRATEGIC CHANGES TO THE FUND?
A. In order to emphasize aluminum, I've had to de-emphasize some of the
fund's other concentrations. I've cut back on companies where business
prospects aren't as favorable. I've also altered the fund's paper position
somewhat by replacing pulp companies, such as James River, with companies
where the demand is greater, such as Stone Container, which produces liner
board, and Bowater, which manufactures newsprint. Stone Container is
undervalued and has been a great performer so far this year. Bowater's
fortunes have begun to turn around as the demand for newsprint has grown
with the economy.
Q. WHAT INVESTMENTS HAVE BEEN DISAPPOINTING THIS YEAR?
A. So far, aluminum has underperformed relative to the market. Aluminum
stocks are reacting to the interest rate environment rather than the
favorable supply and demand fundamentals for aluminum that I discussed
earlier. Paper has underperformed - with the exception of Stone Container -
for the same reason.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Although no one knows what the market will do, as it continues to search
for value, I think the stocks in the fund should be good investments. I
think areas such as aluminum, paper and stainless steel should provide good
supply-demand situations for the fund to invest in.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1995, more than
$183 million
MANAGER: Douglas B. Chase, since November
1994; equity analyst, steel, non-ferrous
metals, since 1993; joined Fidelity in 1993
(checkmark)
INDUSTRIAL MATERIALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.5%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 17.3%
CHEMICALS - 12.0%
AKZO NV sponsored ADR 30,000 $ 1,747,500 01019930
Grace (W.R.) & Co. 56,600 2,547,000 38388310
Olin Corp. 10,400 529,100 68066520
Union Carbide Corp. 538,200 15,405,975 90558110
Witco Corp. 43,900 1,256,635 97738510
21,486,210
CHEMICALS, GENERAL - 4.3%
Great Lakes Chemical Corp. 126,700 7,617,838 39056810
PLASTICS & SYNTHETIC RESINS - 1.0%
ARCO Chemical Co. 1,100 46,750 00192010
Geon Co. 58,600 1,699,400 37246W10
1,746,150
TOTAL CHEMICALS & PLASTICS 30,850,198
INDUSTRIAL MACHINERY & EQUIPMENT - 0.3%
FARM MACHINERY & EQUIPMENT - 0.3%
Kverneland Gruppen AS 34,597 491,719 50599692
IRON & STEEL - 4.7%
BLAST FURNACES - 2.0%
Armco, Inc. (a) 100,000 662,500 04217010
J & L Specialty Steel, Inc. 150,800 2,902,900 46604610
3,565,400
IRON & STEEL BLAST FURNACE, MILLS - 2.7%
Allegheny Ludlum Industries, Inc. 64,600 1,364,675 01690010
Nucor Corp. 60,000 3,367,500 67034610
Worthington Industries, Inc. 10,000 201,250 98181110
4,933,425
TOTAL IRON & STEEL 8,498,825
METALS & MINING - 27.9%
ALUMINUM SHEET, PLATE & FOIL - 1.4%
Kaiser Aluminum Corp. (a) 231,100 2,426,550 48300710
ALUMINUM, EXTRUDED PRODUCTS - 3.2%
Alumax, Inc. (a) 200,000 5,725,000 02219710
PRIMARY PRODUCTION OF ALUMINUM - 8.8%
Reynolds Metals Co. 314,800 15,740,000 76176310
PRIME NONFERROUS SMELTING - 14.5%
Alcan Aluminium Ltd. 351,975 8,580,587 01371610
Aluminum Co. of America 441,800 17,230,200 02224910
25,810,787
TOTAL METALS & MINING 49,702,337
OIL & GAS - 8.7%
OIL & GAS EXPLORATION - 8.7%
Amerada Hess Corp. 168,300 8,246,700 02355110
British Petroleum PLC ADR 81,342 6,222,663 11088940
Phillips Petroleum Co. 30,000 1,001,250 71850710
15,470,613
PAPER & FOREST PRODUCTS - 28.0%
PAPER - 23.7%
Abitibi-Price, Inc. (a) 12,000 157,605 00368010
Federal Paper Board Co., Inc. 2,300 68,425 31369310
Georgia-Pacific Corp. 51,100 3,826,113 37329810
Stone Container Corp. (a) 1,000,000 23,375,000 86158910
Temple-Inland, Inc. 302,900 14,804,238 87986810
42,231,381
SHARES VALUE (NOTE 1)
PAPER MILLS - 4.3%
Bowater, Inc. 232,500 $ 7,730,625 10218310
TOTAL PAPER & FOREST PRODUCTS 49,962,006
PRECIOUS METALS - 1.6%
GOLD ORES - 1.6%
Hecla Mining Co. (a) 302,300 2,834,063 42270410
RAILROADS - 1.6%
RAILROADS - 1.6%
CSX Corp. 37,000 2,876,750 12640810
SERVICES - 1.4%
SURVEYING SERVICES - 1.4%
Western Atlas, Inc. 60,000 2,475,000 95767410
TOTAL COMMON STOCKS
(Cost $157,268,999) 163,161,511
REPURCHASE AGREEMENTS - 8.5%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 6.08%
dated 2/28/95 due 3/1/95 $15,091,548 15,089,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $172,357,999) $ 178,250,511
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $252,193,437 and $205,243,838, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $73,573 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the period for
which the loan was outstanding amounted to $2,584,000. The weighted
average interest rate paid was 4.2% (see Note 8 of Notes to Financial
Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $173,079,405. Net unrealized appreciation
aggregated $5,171,106, of which $10,909,960 related to appreciated
investment securities and $5,738,854 related to depreciated investment
securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $6,176,000 of which $5,277,000, $141,000 and $758,000 will
expire on February 28, 1997, 1998 and 1999, respectively.
The fund has elected to defer to its fiscal year ending February 28, 1996
$4,701,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
INDUSTRIAL MATERIALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $15,089,000) (cost $172,357,999) - See $ 178,250,511
accompanying schedule
Cash 561
Receivable for investments sold 7,450,339
Receivable for fund shares sold 1,849,561
Dividends receivable 367,499
Redemption fees receivable 1,041
TOTAL ASSETS 187,919,512
LIABILITIES
Payable for investments purchased $ 2,349,740
Payable for fund shares redeemed 1,877,597
Accrued management fee 94,591
Other payables and 143,571
accrued expenses
TOTAL LIABILITIES 4,465,499
NET ASSETS $ 183,454,013
Net Assets consist of:
Paid in capital $ 188,858,785
Undistributed net investment income 242,884
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (11,540,558
)
Net unrealized appreciation (depreciation) on investments 5,892,902
and assets and liabilities in
foreign currencies
NET ASSETS, for 7,931,283 $ 183,454,013
shares outstanding
NET ASSET VALUE and redemption price per share ($183,454,013 (divided by) 7,931,283 shares) $23.13
Maximum offering price per share (100/97.00 of $23.13) $23.85
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 2,751,562
Dividends
Interest (including security lending fees of $2,280) 1,330,170
TOTAL INCOME 4,081,732
EXPENSES
Management fee $ 1,097,939
Transfer agent 1,450,957
Fees
Redemption fees (134,588
)
Accounting and security lending fees 177,982
Non-interested trustees' compensation 1,094
Custodian fees and expenses 16,706
Registration fees 114,154
Audit 24,085
Legal 1,260
Interest 902
Reports to shareholders 6,245
Miscellaneous 1,126
Total expenses before reductions 2,757,862
Expense reductions (41,794 2,716,068
)
NET INVESTMENT INCOME 1,365,664
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (284,320
)
Foreign currency transactions (44 (284,364
) )
Change in net unrealized appreciation (depreciation) on:
Investment securities 5,771,838
Assets and liabilities in 390 5,772,228
foreign currencies
NET GAIN (LOSS) 5,487,864
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 6,853,528
OTHER INFORMATION $1,749,955
Sales Charges Paid to FDC
Deferred sales charges withheld $4,699
by FDC
Exchange fees withheld by FSC $95,310
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,365,664 $ 252,679
Net investment income
Net realized gain (loss) (284,364 5,537,215
)
Change in net unrealized appreciation (depreciation) 5,772,228 584,391
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 6,853,528 6,374,285
Distributions to shareholders from net investment income (1,376,864 (63,962
) )
Share transactions 260,333,131 184,699,746
Net proceeds from sales of shares
Reinvestment of distributions 1,355,960 62,757
Cost of shares redeemed (239,750,488 (60,508,680
) )
Paid in capital portion of redemption fees 318,123 115,446
Net increase (decrease) in net assets resulting from share transactions 22,256,726 124,369,269
TOTAL INCREASE (DECREASE) IN NET ASSETS 27,733,390 130,679,592
NET ASSETS
Beginning of period 155,720,623 25,041,031
End of period (including undistributed net investment income of $242,884 and $246,597, respectively)$ 183,454,013 $ 155,720,623
OTHER INFORMATION
Shares
Sold 11,552,985 8,798,809
Issued in reinvestment of distributions 64,252 3,433
Redeemed (10,870,758 (3,053,659
) )
Net increase (decrease) 746,479 5,748,583
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.67 $ 17.44 $ 17.12 $ 12.63 $ 12.43
Income from Investment Operations
Net investment income .17 .15 .12 .04 .15
Net realized and unrealized gain (loss) 1.43 4.07 .19 4.32 .37
Total from investment operations 1.60 4.22 .31 4.36 .52
Less Distributions (.18) (.06) (.08) - -
From net investment income
In excess of net investment income - - - (.06) (.34)
Total distributions (.18) (.06) (.08) (.06) (.34)
Redemption fees added to paid in capital .04 .07 .09 .19 .02
Net asset value, end of period $ 23.13 $ 21.67 $ 17.44 $ 17.12 $ 12.63
TOTAL RETURN B, C 7.65% 24.66% 2.36% 36.15% 4.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 183,454 $ 155,721 $ 25,041 $ 22,184 $ 2,689
Ratio of expenses to average net assets 1.53% 2.08% 2.02% A 2.47% 2.49%
Ratio of expenses to average net assets before expense reductions 1.56% 2.10% 2.02% A 2.81% 2.67%
Ratio of net investment income to average net assets .77% .75% .86% A .25% 1.30%
Portfolio turnover rate 139% 185% 273% A 222% 148%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
PAPER AND FOREST PRODUCTS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
PAPER AND FOREST PRODUCTS 14.91% 106.47% 162.98%
PAPER AND FOREST PRODUCTS
(INCL. 3% SALES CHARGE) 11.46% 100.28% 155.09%
S&P 500 7.36% 71.20% 158.12%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 30, 1986. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
PAPER AND FOREST PRODUCTS 14.91% 15.60% 11.79%
PAPER AND FOREST PRODUCTS
(INCL. 3% SALES CHARGE) 11.46% 14.90% 11.40%
S&P 500 7.36% 11.35% 11.55%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Paper & ForesStandard & Poor's 50
06/30/86 9700.00 10000.00
07/31/86 9515.70 9488.77
08/31/86 10689.40 10192.84
09/30/86 10573.00 9349.89
10/31/86 11358.70 9889.38
11/30/86 11834.00 10129.69
12/31/86 11659.40 9871.39
01/31/87 14714.90 11201.06
02/28/87 15190.20 11643.50
03/31/87 16354.20 11980.00
04/30/87 15384.20 11873.38
05/31/87 14501.50 11976.68
06/30/87 15141.70 12581.50
07/31/87 15326.00 13219.38
08/31/87 16441.50 13712.46
09/30/87 15946.80 13412.16
10/31/87 11213.20 10523.18
11/30/87 10825.20 9656.07
12/31/87 12118.45 10390.90
01/31/88 11629.03 10828.35
02/29/88 12724.90 11332.96
03/31/88 12320.60 10982.77
04/30/88 12458.91 11104.68
05/31/88 12320.60 11201.29
06/30/88 13597.34 11715.43
07/31/88 12990.89 11670.91
08/31/88 12352.52 11274.10
09/30/88 12597.23 11754.37
10/31/88 12320.60 12081.14
11/30/88 12054.61 11908.38
12/31/88 12938.95 12116.78
01/31/89 13066.95 13003.73
02/28/89 12682.94 12679.94
03/31/89 12693.61 12975.38
04/30/89 13152.29 13648.80
05/31/89 13386.96 14201.58
06/30/89 12533.61 14120.63
07/31/89 13738.97 15395.72
08/31/89 14720.32 15697.48
09/30/89 13909.64 15633.12
10/31/89 13280.29 15270.43
11/30/89 13184.29 15581.95
12/31/89 13466.65 15955.91
01/31/90 12235.54 14885.27
02/28/90 12354.33 15077.29
03/31/90 12699.91 15476.84
04/30/90 11879.16 15089.92
05/31/90 12667.51 16561.19
06/30/90 12365.13 16448.57
07/31/90 12548.72 16395.93
08/31/90 11047.62 14913.74
09/30/90 9978.50 14187.44
10/31/90 9665.32 14126.44
11/30/90 10637.25 15039.00
12/31/90 11432.17 15458.59
01/31/91 12376.61 16132.59
02/28/91 12969.64 17286.07
03/31/91 13233.20 17704.39
04/30/91 13881.13 17746.88
05/31/91 15473.51 18513.55
06/30/91 15078.16 17665.63
07/31/91 15089.14 18488.84
08/31/91 15166.02 18927.03
09/30/91 14583.98 18610.95
10/31/91 15133.07 18860.33
11/30/91 13979.97 18100.26
12/31/91 15406.60 20170.93
01/31/92 16823.55 19795.75
02/29/92 16902.27 20053.10
03/31/92 17014.73 19662.06
04/30/92 17284.63 20240.13
05/31/92 16801.06 20339.30
06/30/92 16689.45 20036.25
07/31/92 16565.49 20855.73
08/31/92 15900.62 20428.19
09/30/92 15731.58 20669.24
10/31/92 16497.87 20741.58
11/30/92 17106.40 21448.87
12/31/92 17263.87 21712.69
01/31/93 17795.58 21895.08
02/28/93 18191.55 22192.85
03/31/93 18168.92 22661.12
04/30/93 18995.41 22112.72
05/31/93 19052.01 22705.34
06/30/93 18644.48 22771.19
07/31/93 18452.04 22680.10
08/31/93 18950.13 23539.68
09/30/93 18044.51 23358.43
10/31/93 18746.37 23841.94
11/30/93 19912.35 23615.45
12/31/93 20467.05 23901.19
01/31/94 22844.30 24713.83
02/28/94 22199.05 24044.09
03/31/94 19844.43 22995.77
04/30/94 19822.25 23290.11
05/31/94 20630.85 23672.07
06/30/94 20422.93 23092.10
07/31/94 22155.64 23849.53
08/31/94 24627.65 24827.36
09/30/94 25066.60 24219.09
10/31/94 23507.16 24764.01
11/30/94 22479.08 23862.11
12/31/94 23360.74 24215.98
01/31/95 23203.88 24843.91
02/28/95 25508.58 25812.07
Let's say you invested $10,000 in Fidelity Select Paper and Forest Products
Portfolio on June 30, 1986, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $25,509 -
a 155.09% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $25,812 over the same period - a 158.12% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Stone Container Corp. 5.5
Champion International Corp. 5.3
Temple-Inland, Inc. 5.3
International Paper Co. 4.9
Georgia-Pacific Corp. 4.8
Union Camp Corp. 4.4
Mead Corp. 4.2
Willamette Industries, Inc. 3.9
Scott Paper Co. 3.8
Weyerhaeuser Co. 3.6
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 12.3
Row: 1, Col: 2, Value: 1.8
Row: 1, Col: 3, Value: 3.2
Row: 1, Col: 4, Value: 82.7
Paper & Allied Products 82.7%
Services for Print Industry 3.2%
Paper Containers 1.8%
All Others 12.3%*
* INCLUDES SHORT-TERM INVESTMENTS
PAPER AND FOREST PRODUCTS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Scott Offen,
Portfolio Manager of Fidelity Select Paper and Forest Products Portfolio
Q. SCOTT, HOW DID THE FUND PERFORM?
A. For the 12 months ended February 28, 1995, the fund had a total return
of 14.91%, beating the S&P 500, which returned 7.36% during the same
period.
Q. YOU MUST BE PLEASED WITH THOSE RESULTS.
A. Yes and no. There's no question that nearly doubling the return of the
S&P 500 is quite satisfying. However, given the degree of improvement in
the underlying business prospects throughout most of the paper industry,
I'd say the results are even a bit disappointing. What's happening is a
tug-of-war between positive earnings reports for paper companies on one
side, and recession fears on the other. Paper and forest products are
cyclical commodities. Demand for them - and, as a result, their prices -
generally rises and falls with the economy. As sentiment that the economy
might be slowing down has crept into the market, investors have become less
positive about the sector's prospects. Given a more stable interest rate
environment, the stocks probably would have been up even more.
Q. STILL, THE SECTOR IS GOING STRONG . . .
A. Yes. Paper prices were high over the period, supply was short and demand
has continued to grow. However, we were starting to see signs that the
industry is starting to add production capacity, or supply, specifically in
liner board/packaging-grade products. Paper companies have focused on this
grade because it has reached higher profitability levels more quickly than
other grades. By year-end, I wouldn't be surprised to see capacity added
for the production of other grades. Paper companies don't want paper prices
to go so high that they squelch demand, or create a situation where there
isn't enough supply. The trick will be for the industry to add just enough
capacity to meet the new demand. But it's very easy to overbuild and create
too much supply, depressing prices. If this happens, earnings for domestic
paper producers may be sustained by exports because demand is very strong
overseas, especially in Southeast Asia and China.
Q. MOST OF YOUR DISCUSSION THUS FAR HAS BEEN ON PAPER PRODUCTS. WHAT ABOUT
WOOD PRODUCTS?
A. Wood products do well in the early part of an economic cycle, when
growth in new housing tends to be stronger. I've moved more of the fund's
investments into companies that are positioned to take advantage of
positive business prospects related to the production of paper, because
it's a commodity that typically does better late in a cycle, where it
appears we are now.
Q. LET'S TURN TO SPECIFIC STOCKS. WHICH ONES HAVE HELPED THE FUND'S
PERFORMANCE OVER THE PAST SIX MONTHS?
A. Stone Container has been a solid performer. It produces three major
grades of paper, the prices of which were at or near all-time highs over
the period: pulp, newsprint and liner board. I find the stock has been
very inexpensive, even though the company is carrying a fair amount of
debt. It appears the market is underestimating how much debt the company
can pay off in the course of this commodity cycle. I believe Stone has
leverage to take advantage of the positive commodity environment. Another
big winner has been Scott Paper, a manufacturer of less volatile tissue,
towel and napkin grades. Scott was a mediocre old-line company that has
been restructured by a new chairman. The outlook there is very positive.
Finally, I've increased the fund's stake in Champion. The stock has done
well, and given the price/supply/demand backdrop - along with a stock price
I found to be inexpensive - I think the prospects for continued strong
performance are quite good.
Q. WHAT ABOUT DISAPPOINTMENTS?
A. Jefferson Smurfit was a disappointing stock. A majority shareholder has
been trying to sell its interest, and every time it does so, the stock
price goes down. Weyerhaeuser also underperformed, mainly because investors
have been concerned that the wood component of its business might be a drag
on earnings.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Looking at supply, demand and capacity, I think the outlook for the next
year seems very good, barring a recession. It looks like paper fiber will
stay in short supply, so paper prices should remain strong. I believe paper
company earnings could continue to surprise on the upside.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1995, more than
$94 million
MANAGER: Scott Offen, since 1993; manager
Fidelity Select Brokerage and Investment
Management Portfolio, 1990-1993; Fidelity
Select Life Insurance Portfolio, 1988-1990;
joined Fidelity in 1985
(checkmark)
PAPER AND FOREST PRODUCTS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.4%
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 1.6%
GENERAL INDUSTRIAL MACHINERY - 1.1%
Harnischfeger Industries, Inc. 38,100 $ 1,062,038 41334510
SPECIAL INDUSTRIAL MACHINERY - 0.5%
Valmet Corp. Ord. (a) 21,700 437,990 92029991
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 1,500,028
PACKAGING & CONTAINERS - 2.6%
FIBER CANS, TUBES & DRUMS - 0.7%
Sonoco Products Co. 26,400 640,200 83549510
FOLDING PAPERBOARD BOXES - 0.1%
La Rochette (a) 7,300 82,406 52098099
PAPER CONTAINERS - 1.8%
Gaylord Container Corp. (a):
Class A 59,500 788,370 36814510
(warrants) 82,000 850,750 36814511
Mayr Melnhof Karton AG (a) 800 52,279 57847192
1,691,399
TOTAL PACKAGING & CONTAINERS 2,414,005
PAPER & FOREST PRODUCTS - 82.7%
PAPER & ALLIED PRODUCTS - 82.7%
Abitibi Price, Inc. 2nd installment
receipt (a) (b) 105,400 1,024,001 00368080
Avenor, Inc. (a) 29,800 611,205 05356K10
Boise Cascade Corp. 80,100 2,573,213 09738310
Bowater, Inc. 58,600 1,948,450 10218310
Caraustar Industries, Inc. 37,800 718,200 14090910
Champion International Corp. 120,600 4,959,675 15852510
Chesapeake Corp. 41,000 1,353,000 16515910
Consolidated Papers, Inc. 41,300 1,997,888 20975910
Domtar Inc. (a) 137,800 1,177,629 25756110
Enso-Gutzeit OY Class R Free shares 48,300 374,954 29357810
Federal Paper Board Co., Inc. 63,700 1,895,075 31369310
Fletcher Challenge Canada Ltd.
Class A (a) 14,900 199,714 33932D10
Georgia-Pacific Corp. (a) 59,800 4,477,525 37329810
International Paper Co. 60,100 4,590,138 46014610
James River Corp. of Virginia 89,500 2,203,938 47034910
Jefferson Smurfit Corp. (a) 83,400 1,636,725 47508710
Jefferson Smurfit Group PLC 122,670 772,619 84699793
Kimberly-Clark Corp. 20,000 1,040,000 49436810
KNP BT NV, Koninklijke 22,200 708,223 50099193
Kymmene Corp. 25,900 746,803 50699692
Leykam Muerstaler Pap Und.
Zel (Ord.) (a) 3,600 171,287 52899092
MacMillan Bloedel Ltd. 62,300 807,024 55478320
Mead Corp. 70,900 3,881,775 58283410
Metsa-Serla Ltd. Class B 16,300 657,994 59299992
Mo Och Domsjoe AB (Modo) (a) 27,000 1,342,827 61399792
Pentair, Inc. 11,200 480,900 70963110
Potlatch Corp. 11,800 508,875 73762810
QUNO Corp. (a) 21,400 381,167 74726H10
Rayonier, Inc. 46,700 1,401,000 75490710
Repola OY 26,500 467,279 75999A92
Repap Enterprises, Inc. (a) 111,700 783,761 76026M30
Rock-Tenn Co. CLass A 30,300 552,975 77273920
St Laurent Paperboard, Inc. (a) 11,200 163,218 79090710
Scott Paper Co. 44,900 3,558,325 80987710
Smith Holdings PLC (DS) 18,500 154,579 83199792
Stone Consolidated Corp. (a) 42,200 546,652 86158K10
Stone Container Corp. (a) 220,700 5,158,863 86158910
Stora Kopparbergs B Free shares 22,200 1,428,838 86210998
SHARES VALUE (NOTE 1)
Svenska Cellulosa Aktiebolaget
SCA Ord. B 44,500 $ 787,177 86958730
Temple-Inland, Inc. 100,600 4,916,825 87986810
Union Camp Corp. 80,600 4,150,900 90553010
Wausau Paper Mills Co. 16,510 363,220 94331710
Westvaco Corp. 68,800 2,717,600 96154810
Weyerhaeuser Co. 82,000 3,341,500 96216610
Willamette Industries, Inc. 67,400 3,622,750 96913310
77,356,286
PRINTING - 3.2%
SERVICES FOR PRINT INDUSTRY - 3.2%
Alco Standard Corp. 44,700 3,039,600 01378810
SERVICES - 0.3%
BUSINESS SERVICES - 0.3%
De La Rue Co. 16,400 265,629 24642110
TOTAL COMMON STOCKS
(Cost $79,516,843) 84,575,548
REPURCHASE AGREEMENTS - 9.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $ 8,942,510 8,941,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $88,457,843) $ 93,516,548
CURRENCY ABBREVIATION
CAD - Canadian dollar
LEGEND
1. Non-income producing
2. Purchased on an installment basis. Market value reflects only those
payments made through January, 1995. The remaining installment aggregating
CAD $527,000 is due October, 1995.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $122,743,514 and $110,312,028, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $71,722 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $9,240,000 and $3,589,000,
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 84.9%
Canada 6.1
Sweden 3.8
Finland 2.9
Others (individually less than 1%) 2.3
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $89,445,678. Net unrealized appreciation aggregated
$4,070,870, of which $5,195,347 related to appreciated investment
securities and $1,124,477 related to depreciated investment securities.
The fund hereby designates $262,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
PAPER AND FOREST PRODUCTS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $8,941,000) (cost $88,457,843) - See $ 93,516,548
accompanying schedule
Cash 7,372
Receivable for fund shares sold 6,702,454
Dividends receivable 196,139
Redemption fees receivable 531
TOTAL ASSETS 100,423,044
LIABILITIES
Payable for investments purchased $ 4,149,914
Payable for fund shares redeemed 1,930,016
Accrued management fee 45,010
Other payables and accrued expenses 79,223
TOTAL LIABILITIES 6,204,163
NET ASSETS $ 94,218,881
Net Assets consist of:
Paid in capital $ 88,297,915
Undistributed net investment income 31,587
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 830,618
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 5,058,761
NET ASSETS, for 4,456,192 shares outstanding $ 94,218,881
NET ASSET VALUE and redemption price per share ($94,218,881 (divided by) 4,456,192 shares) $21.14
Maximum offering price per share (100/97.00 of $21.14) $21.79
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 803,859
Dividends
Interest (including security lending fees of $1,777) 274,366
TOTAL INCOME 1,078,225
EXPENSES
Management fee $ 348,896
Transfer agent 636,949
Fees
Redemption fees (100,378
)
Accounting and security lending fees 62,045
Non-interested trustees' compensation 546
Custodian fees and expenses 26,986
Registration fees 41,863
Audit 21,944
Legal 741
Interest 12,671
Reports to shareholders 3,948
Miscellaneous 336
Total expenses before reductions 1,056,547
Expense reductions (6,061 1,050,486
)
NET INVESTMENT INCOME 27,739
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 2,943,852
Foreign currency transactions 5,137 2,948,989
Change in net unrealized appreciation (depreciation) on:
Investment securities 2,027,894
Assets and liabilities in 56 2,027,950
foreign currencies
NET GAIN (LOSS) 4,976,939
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,004,678
OTHER INFORMATION $691,097
Sales Charges Paid to FDC
Deferred sales charges withheld $2,973
by FDC
Exchange fees withheld by FSC $81,960
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
Operations $ 27,739 $ (20,302
Net investment income (loss) )
Net realized gain (loss) 2,948,989 2,597,166
Change in net unrealized appreciation (depreciation) 2,027,950 2,559,400
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,004,678 5,136,264
Distributions to shareholders: - (10,601
From net investment income )
From net realized gain (2,454,993 -
)
TOTAL DISTRIBUTIONS (2,454,993 (10,601
) )
Share transactions 242,587,009 149,638,420
Net proceeds from sales of shares
Reinvestment of distributions 2,407,320 10,249
Cost of shares redeemed (220,695,611 (113,224,182
) )
Paid in capital portion of redemption fees 462,733 259,283
Net increase (decrease) in net assets resulting from share transactions 24,761,451 36,683,770
TOTAL INCREASE (DECREASE) IN NET ASSETS 27,311,136 41,809,433
NET ASSETS
Beginning of period 66,907,745 25,098,312
End of period (including undistributed net investment income (loss) of $31,587 and $(1,289),
respectively) $ 94,218,881 $ 66,907,745
OTHER INFORMATION
Shares
Sold 12,091,048 8,097,781
Issued in reinvestment of distributions 132,918 645
Redeemed (11,180,290 (6,246,980
) )
Net increase (decrease) 1,043,676 1,851,446
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.61 $ 16.08 $ 15.37 $ 12.64 $ 11.00
Income from Investment Operations
Net investment income (loss) .01 (.01) .06 .13 .19
Net realized and unrealized gain (loss) 2.53 3.38 .65 2.64 1.56
Total from investment operations 2.54 3.37 .71 2.77 1.75
Less Distributions - (.01) (.09) (.30) (.17)
From net investment income
From net realized gain (1.17) - - - -
Total distributions (1.17) (.01) (.09) (.30) (.17)
Redemption fees added to paid in capital .16 .17 .09 .26 .06
Net asset value, end of period $ 21.14 $ 19.61 $ 16.08 $ 15.37 $ 12.64
TOTAL RETURN B,C 14.91% 22.03% 5.25% 24.52% 16.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 94,219 $ 66,908 $ 25,098 $ 28,957 $ 12,579
Ratio of expenses to average net assets 1.87% 2.07% 2.21% A 2.05% 2.49%
Ratio of expenses to average net assets before expense reductions 1.88% 2.08% 2.21% A 2.05% 2.72%
Ratio of net investment income (loss) to average net assets .05% (.08)% .49% A .92% 1.73%
Portfolio turnover rate 209% 176% 222% A 421% 171%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
TRANSPORTATION PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
TRANSPORTATION 5.90% 118.03% 224.95%
TRANSPORTATION
(INCL. 3% SALES CHARGE) 2.72% 111.49% 215.20%
S&P 500 7.36% 71.20% 175.04%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on September 29, 1986. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
TRANSPORTATION 5.90% 16.87% 15.01%
TRANSPORTATION
(INCL. 3% SALES CHARGE) 2.72% 16.16% 14.60%
S&P 500 7.36% 11.35% 12.76%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select TransportatioStandard & Poor's 50
09/29/86 9700.00 10000.00
09/30/86 9748.50 9962.80
10/31/86 10039.50 10537.66
11/30/86 10204.40 10793.72
12/31/86 10039.50 10518.48
01/31/87 10737.90 11935.32
02/28/87 11397.50 12406.77
03/31/87 11397.50 12765.32
04/30/87 11475.10 12651.71
05/31/87 11649.70 12761.78
06/30/87 11998.90 13406.25
07/31/87 12474.20 14085.95
08/31/87 12474.20 14611.35
09/30/87 11795.20 14291.37
10/31/87 7992.80 11213.00
11/30/87 7527.20 10289.05
12/31/87 8284.50 11072.05
01/31/88 8698.73 11538.18
02/29/88 9418.69 12075.86
03/31/88 9704.70 11702.72
04/30/88 9734.29 11832.62
05/31/88 9675.11 11935.56
06/30/88 10661.36 12483.41
07/31/88 10523.29 12435.97
08/31/88 10030.16 12013.15
09/30/88 10690.95 12524.91
10/31/88 11036.14 12873.10
11/30/88 11134.76 12689.01
12/31/88 11470.09 12911.07
01/31/89 12456.34 13856.16
02/28/89 12584.55 13511.14
03/31/89 12969.19 13825.95
04/30/89 13403.14 14543.52
05/31/89 13975.16 15132.53
06/30/89 13889.01 15046.28
07/31/89 14730.77 16404.95
08/31/89 15688.27 16726.49
09/30/89 15383.13 16657.91
10/31/89 14404.59 16271.45
11/30/89 14530.85 16603.39
12/31/89 14737.71 17001.87
01/31/90 13812.21 15861.04
02/28/90 14456.54 16065.65
03/31/90 14890.01 16491.39
04/30/90 14327.68 16079.11
05/31/90 14854.86 17646.82
06/30/90 14691.34 17526.82
07/31/90 14642.53 17470.73
08/31/90 12494.96 15891.38
09/30/90 10884.28 15117.47
10/31/90 10713.45 15052.46
11/30/90 11152.73 16024.85
12/31/90 11555.40 16471.95
01/31/91 12543.77 17190.12
02/28/91 13763.98 18419.22
03/31/91 13776.18 18864.96
04/30/91 13739.58 18910.24
05/31/91 14825.56 19727.16
06/30/91 14702.47 18823.66
07/31/91 15596.13 19700.84
08/31/91 15877.69 20167.75
09/30/91 15583.89 19830.95
10/31/91 16734.62 20096.68
11/30/91 15694.06 19286.79
12/31/91 17811.91 21493.19
01/31/92 17971.05 21093.42
02/29/92 18938.16 21367.64
03/31/92 18485.21 20950.97
04/30/92 18962.64 21566.92
05/31/92 19354.38 21672.60
06/30/92 18521.93 21349.68
07/31/92 18791.26 22222.88
08/31/92 18228.13 21767.31
09/30/92 18950.40 22024.17
10/31/92 19758.36 22101.25
11/30/92 21190.66 22854.91
12/31/92 22049.81 23136.02
01/31/93 23037.30 23330.36
02/28/93 23349.79 23647.66
03/31/93 24912.28 24146.62
04/30/93 24850.18 23562.27
05/31/93 25778.45 24193.74
06/30/93 25853.72 24263.90
07/31/93 25853.72 24166.85
08/31/93 26330.40 25082.77
09/30/93 26393.12 24889.63
10/31/93 26945.07 25404.85
11/30/93 27095.60 25163.50
12/31/93 28513.96 25467.98
01/31/94 29763.85 26333.89
02/28/94 29763.85 25620.25
03/31/94 28967.22 24503.20
04/30/94 29508.52 24816.84
05/31/94 29034.15 25223.84
06/30/94 29006.25 24605.86
07/31/94 29982.89 25412.93
08/31/94 30875.82 26454.86
09/30/94 30052.65 25806.71
10/31/94 30499.12 26387.37
11/30/94 28671.40 25426.34
12/31/94 29616.42 25803.41
01/31/95 29416.83 26472.49
02/28/95 31520.22 27504.13
Let's say you invested $10,000 in Fidelity Select Transportation Portfolio
on September 29, 1986 when the fund started and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $31,520 - a 215.20%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $27,504 over the same period - a 175.04% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Burlington Northern, Inc. 9.1
CSX Corp. 9.0
Landstar System, Inc. 5.9
Wisconsin Central Transportation Corp. 5.2
Chicago & North Western Holdings Corp. 5.0
Carolina Freight Corp. 4.1
Consolidated Freightways, Inc. 3.8
TNT Freightways Corp. 3.7
Canadian Pacific Ltd. Ord. 3.6
Rollins Truck Leasing Corp. 3.2
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 23.7
Row: 1, Col: 2, Value: 2.8
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 9.9
Row: 1, Col: 5, Value: 20.2
Row: 1, Col: 6, Value: 40.5
Railroads 40.5%
Trucking, Local &
Long Distance 20.2%
Trucking, Long Distance 9.9%
Air Transport,
Major National 2.9%
Shipping 2.8%
All Others 23.7%*
* INCLUDES SHORT-TERM INVESTMENTS
TRANSPORTATION PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen DuFour,
Portfolio Manager of Fidelity Select Transportation Portfolio
Q. STEVE, HOW DID THE FUND STACK UP THIS YEAR?
A. It did well in what was a poor year for the transportation sector. The
group trades on expectations of future growth, not on today's results. So
the market discounted the strong earnings that transportation companies
were reporting, believing the economy would slow in 1995 and hurt earnings
growth. The S&P 500 was up 7.36% for the year ended February 28, 1995. By
comparison, the fund returned 5.90% over the same period.
Q. WHAT ACCOUNTS FOR THE FUND'S PERFORMANCE?
A. During the first nine months of the period, we successfully avoided weak
railroad and trucking stocks in the U.S. As much as 20% of the fund was in
foreign transportation stocks, which rose with prospects for an economic
recovery in Europe and a market rebound in Japan. Although individually
these were small investments, as a group they probably fared better than
many U.S. companies. Several domestic truckers were also top contributors
to performance. They included Landstar System, which attracted more
owner-operators than the competition; Carolina Freight, which turned itself
around through restructuring and new business ventures; and Swift
Transport, a well-run company that benefited during the period as the
industry consolidated. During the last three months of the period, we
increased our stake in railroads, which also benefited the fund.
Q. WHAT MADE YOU DECIDE TO SHIFT BACK TO RAILROADS?
A. They were attractive because of the industry's strong barriers to entry,
historically cheap stock prices and steady free cash flow - cash available
after capital expenses and dividends that can be used to pay down debt, buy
back stock or add cash to the balance sheet. Plus, they continued to cut
costs, which makes each additional carload increasingly profitable.
Q. IS THIS WHY YOU BOUGHT BACK CSX, ONCE AGAIN ONE OF THE FUND'S TOP
INVESTMENTS?
A. Yes, CSX's stock was attractive because its price had fallen along with
other railroad stocks, yet it continued to generate very strong cash flow.
From its December low to the end of February, CSX's stock price rose 18%,
making it a top contributor to performance during the second half of the
period. We also increased our stake in Burlington Northern, a railroad
whose stock price rose 15% between late January and late February on news
of its impending merger with Santa Fe Pacific. We also owned smaller
regional railroads, such as Wisconsin Central, whose strategy of acquiring
parts of other railroads and lowering their cost structures has been quite
successful. It also did well for the fund during the period.
Q. YOU TOOK OVER THE FUND IN DECEMBER. WHAT CHANGES HAVE YOU MADE SINCE
THEN?
A. I've cut back from 90 stocks to 50, so each can make more of a
difference to performance. In particular, I pared back on overseas
investments, as well as airline and shipping names. I'm not comfortable
owning either airlines or shipping stocks because of the volatile pricing
in those industries. And while many of the international stocks have good
prospects, I think the domestic railroads and selected trucking stocks
represent equally good or better opportunities.
Q. LOOKING BACK, WHERE WERE THE DISAPPOINTMENTS?
A. Our regional airline investments suffered from increased competition and
an inability to grow passenger loads as fast as anticipated, which in turn
hurt fund performance. Another disappointment was Canadian Pacific, a
railroad and natural resource conglomerate. It struggled to deal with a
strike in its U.S. operations, an impending strike in Canada,
less-than-expected results from its railroad operations and declining
natural gas prices. However, I still believe the stock is attractive and
could rise before the company resolves these problems.
Q. DO YOU THINK 1995 WILL BE A BETTER YEAR FOR TRANSPORTATION STOCKS THAN
1994 WAS?
A. Yes, if their stock prices continue to move in anticipation of what's
ahead. Once the economy slows, investors will most likely start moving back
into transportation stocks looking for ways to benefit from an upturn. The
railroads and selected trucking stocks seem to me to be in the best
position to benefit, so that's where I'll continue to focus. Of course, no
one can be certain what the market will do.
FUND FACTS
START DATE: September 29, 1986
SIZE: as of February 28, 1995, more than
$12 million
MANAGER: Stephen DuFour, since December
1994; manager, Fidelity Select Multimedia
Portfolio, since 1993; equity analyst, media,
1992-1993; joined Fidelity in 1992
(checkmark)
TRANSPORTATION PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 89.9%
SHARES VALUE (NOTE 1)
AIR TRANSPORTATION - 3.4%
AIR TRANSPORT, MAJOR NATIONAL - 2.9%
AMR Corp. (a) 3,000 $ 183,373 00176510
Lufthansa (a) 900 123,321 54976510
KLM Royal Dutch Airlines (a) 400 11,700 48251610
KLM Royal Dutch Airlines Ord. (a) 2,000 57,948 48251620
376,342
TRANSPORTATION SERVICES - 0.5%
Helikopter Services AS 6,500 67,279 42499192
TOTAL AIR TRANSPORTATION 443,621
AUTOS, TIRES, & ACCESSORIES - 2.7%
AUTO & TRUCK PARTS - 1.8%
Cummins Engine Co., Inc. 5,000 227,500 23102110
MOTOR VEHICLES & CAR BODIES - 0.9%
Renault SA Ord. (a)(b) 1,000 33,204 75967392
Sime Darby Hong Kong Ltd. 20,000 21,988 82899392
Volvo Aktiebolaget Class B 3,000 60,008 92885630
115,200
TRUCK & BUS BODIES - 0.0%
Grupo Dina sponsored ADR, Series L 11 26 21030620
TOTAL AUTOS, TIRES, & ACCESSORIES 342,726
COMMUNICATIONS EQUIPMENT - 0.5%
DATACOMMUNICATIONS EQUIPMENT - 0.5%
Union Switch and Signal, Inc. (a) 5,000 62,500 90857310
ENGINEERING - 0.5%
ELECTRICAL WORK - 0.5%
Nippondenso Co. Ltd. 4,000 70,694 65463710
HOLDING COMPANIES - 0.4%
Man AG Ord. 200 55,903 56154210
IRON & STEEL - 1.0%
METAL STAMPINGS - 1.0%
UPF Group PLC 50,000 130,557 91599G22
LEASING & RENTAL - 1.7%
EQUIPMENT RENTAL & LEASING - 1.7%
GATX Corp. 1,400 62,475 36144810
Ryder Systems, Inc. 6,600 153,450 78354910
TOTAL LEASING & RENTAL 215,925
LEISURE DURABLES & TOYS - 1.3%
MOTORCYCLES - 0.2%
Bajaj Auto Ltd. (GDR) (a)(b) 1,000 23,750 05710010
TRAVEL TRAILERS AND CAMPERS - 1.1%
Champion Enterprises, Inc. (a) 4,300 145,125 15849610
TOTAL LEISURE DURABLES & TOYS 168,875
RAILROADS - 40.5%
Burlington Northern, Inc. 20,900 1,170,400 12189710
CSX Corp. 15,000 1,166,250 12640810
Canadian Pacific Ltd. Ord. 32,900 461,696 13644030
ASG AB Class B Free shares Ord. 12,000 219,620 16599C22
Chicago & North Western
Holdings Corp. (a) 25,600 640,000 16715510
Conrail, Inc. 5,000 276,250 20836810
Illinois Central Corp., Series A 4,300 145,663 45184110
Railtex, Inc. (a) 5,000 117,500 75076610
SHARES VALUE (NOTE 1)
Santa Fe Pacific Corp. 2,148 $ 45,645 80218310
Southern Pacific Rail Corp. (a) 17,000 303,875 84358410
Wisconsin Central Transportation Corp. (a) 14,800 673,400 97659210
TOTAL RAILROADS 5,220,299
SERVICES - 2.3%
COURIER SERVICES, NOT BY AIR - 2.3%
U.S. Delivery Systems, Inc. 16,000 294,000 90329M10
SHIPPING - 4.2%
DEEP SEA TRANSPORT - 1.4%
London & Overseas Freighters PLC 75,000 86,642 54179492
Pacific Basin Bulk Shipping Ltd. unit
(1 common & 1 warrant) (a) 1,000 13,625 69402720
Transportacion Maritima Mexicana SA
de CV ADR representing L share 18,000 76,500 89386820
176,767
SHIPPING - 2.8%
Anangel-American Shipholdings Ltd. ADR 10,000 147,500 03272120
MC Shipping, Inc. (a) 20,000 77,500 55267Q10
Storli Skibs Series `A' AS (a) 7,000 131,932 86229910
356,932
TOTAL SHIPPING 533,699
TRUCKING & FREIGHT - 31.4%
TRANSPORTATION SERVICES - 1.3%
Landair Services, Inc. (a) 10,000 167,500 51475910
TRUCKING, LOCAL & LONG DISTANCE - 20.2%
Carolina Freight Corp. (a) 45,000 534,375 14389810
Consolidated Freightways, Inc. 20,500 486,875 20923710
Hitachi Transport System Co. 5,000 45,424 43699992
Landstar System, Inc. (a) 21,000 756,000 51509810
Matlack Systems, Inc. (a) 7,500 80,625 57690110
Roadway Services, Inc. 2,700 146,475 76974810
Rollins Truck Leasing Corp. 30,000 412,500 77574110
XTRA Corp. 3,000 150,750 98413810
2,613,024
TRUCKING, LONG DISTANCE - 9.9%
Arkansas Best Corp. 10,600 132,500 04079010
Arnold Industries, Inc. 4,100 78,925 04259510
Hunt (J.B.) Transport Services Inc. 20,800 405,600 44565810
Old Dominion Freight Lines, Inc. (a) 10,000 177,500 67958010
TNT Freightways Corp. 17,400 478,500 87259J10
1,273,025
TOTAL TRUCKING & FREIGHT 4,053,549
TOTAL COMMON STOCKS
(Cost $10,290,572) 11,592,348
REPURCHASE AGREEMENTS - 10.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08%
dated 2/28/95 due 3/1/95 $1,309,221 1,309,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $11,599,572) $ 12,901,348
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $56,954 or 0.4% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $20,567,548 and $21,845,648, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $13,867 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,946,000 and $1,744,000,
respectively. The weighted average interest rate paid was 4.8% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 85.5%
Canada 3.6
Sweden 2.2
United Kingdom 1.7
Norway 1.6
Germany 1.4
Japan 1.0
Others (individually less than 1%) 3.0
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $11,604,551. Net unrealized appreciation aggregated
$1,296,797, of which $1,539,032 related to appreciated investment
securities and $242,235 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending February 28, 1996
$314,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
The fund hereby designates $664,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
TRANSPORTATION PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $1,309,000) (cost $11,599,572) - See $ 12,901,348
accompanying schedule
Cash 892
Receivable for investments sold 177,500
Receivable for fund shares sold 1,024,939
Dividends receivable 15,145
Redemption fees receivable 30
TOTAL ASSETS 14,119,854
LIABILITIES
Payable for investments purchased $ 193,688
Payable for fund shares redeemed 1,190,409
Accrued management fee 6,350
Other payables and 24,990
accrued expenses
TOTAL LIABILITIES 1,415,437
NET ASSETS $ 12,704,417
Net Assets consist of:
Paid in capital $ 11,184,414
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 218,214
Net unrealized appreciation (depreciation) on investments 1,301,789
and assets and liabilities in
foreign currencies
NET ASSETS, for 618,873 $ 12,704,417
shares outstanding
NET ASSET VALUE and redemption price per share ($12,704,417 (divided by) 618,873 shares) $20.53
Maximum offering price per share (100/97.00 of $20.53) $21.16
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 129,248
Dividends
Interest 66,286
TOTAL INCOME 195,534
EXPENSES
Management fee $ 79,035
Transfer agent 134,955
Fees
Redemption fees (14,339
)
Accounting fees and expenses 45,053
Non-interested trustees' compensation 208
Custodian fees and expenses 23,579
Registration fees 11,965
Audit 18,363
Legal 183
Interest 2,074
Reports to shareholders 1,006
Miscellaneous 183
Total expenses before reductions 302,265
Expense reductions (1,283 300,982
)
NET INVESTMENT INCOME (LOSS) (105,448
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 1,297,899
Foreign currency transactions 644 1,298,543
Change in net unrealized appreciation (depreciation) on:
Investment securities (804,943
)
Assets and liabilities in 13 (804,930
foreign currencies )
NET GAIN (LOSS) 493,613
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 388,165
Other Information $96,688
Sales charges paid to FDC
Deferred sales charges withheld $771
by FDC
Exchange fees withheld by FSC $10,995
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (105,448 $ (100,747
Net investment income (loss) ) )
Net realized gain (loss) 1,298,543 1,441,309
Change in net unrealized appreciation (depreciation) (804,930 1,066,611
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 388,165 2,407,173
Distributions to shareholders from net realized gains (1,219,559 (827,694
) )
Share transactions 21,385,934 25,059,536
Net proceeds from sales of shares
Reinvestment of distributions 1,177,973 796,335
Cost of shares redeemed (22,133,063 (25,177,172
) )
Paid in capital portion of redemption fees 28,174 39,052
Net increase (decrease) in net assets resulting from share transactions 459,018 717,751
TOTAL INCREASE (DECREASE) IN NET ASSETS (372,376 2,297,230
)
NET ASSETS
Beginning of period 13,076,793 10,779,563
End of period $ 12,704,417 $ 13,076,793
OTHER INFORMATION
Shares
Sold 1,018,198 1,225,390
Issued in reinvestment of distributions 62,121 40,016
Redeemed (1,064,813 (1,239,184
) )
Net increase (decrease) 15,506 26,222
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.67 $ 18.68 $ 15.49 $ 11.26 $ 12.23
Income from Investment Operations
Net investment income (loss) (.17) (.20) (.07) (.05) .06
Net realized and unrealized gain (loss) 1.17 5.07 3.55 4.18 (.57)
Total from investment operations 1.00 4.87 3.48 4.13 (.51)
Less Distributions - - - (.04) -
From net investment income
From net realized gain (2.19) (1.96) (.36) - (.50)
Total distributions (2.19) (1.96) (.36) (.04) (.50)
Redemption fees added to paid in capital .05 .08 .07 .14 .04
Net asset value, end of period $ 20.53 $ 21.67 $ 18.68 $ 15.49 $ 11.26
TOTAL RETURN B, C 5.90% 27.47% 23.14% 38.01% (4.10)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 12,704 $ 13,077 $ 10,780 $ 2,998 $ 770
Ratio of expenses to average net assets 2.36% 2.39% 2.48% A 2.43% 2.39%
Ratio of expenses to average net assets before expense reductions 2.37% 2.40% 4.20% A 3.13% 2.89%
Ratio of net investment income (loss) to average net assets (.83)% (.96)% (.53)% (.34)% .52%
A
Portfolio turnover rate 178% 115% 116% A 423% 187%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
AMERICAN GOLD PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
AMERICAN GOLD -18.62% 3.83% 87.12%
AMERICAN GOLD
(INCL. 3% SALES CHARGE) -21.06% 0.71% 81.51%
S&P 500 7.36% 71.20% 212.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 16, 1985. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
AMERICAN GOLD -18.62% 0.75% 7.04%
AMERICAN GOLD
(INCL. 3% SALES CHARGE) -21.06% 0.14% 6.69%
S&P 500 7.36% 11.35% 13.18%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select American GoldStandard & Poor's 50
12/16/85 9700.00 10000.00
12/31/85 9719.40 10080.42
01/31/86 10097.70 10136.87
02/28/86 9622.40 10895.11
03/31/86 10010.40 11503.06
04/30/86 9806.70 11373.07
05/31/86 9855.20 11978.12
06/30/86 9874.60 12180.55
07/31/86 9826.10 11499.66
08/31/86 10941.60 12352.93
09/30/86 11475.10 11331.35
10/31/86 11310.20 11985.16
11/30/86 11494.50 12276.40
12/31/86 11475.10 11963.36
01/31/87 13221.10 13574.82
02/28/87 14588.80 14111.03
03/31/87 16975.00 14518.83
04/30/87 18032.30 14389.62
05/31/87 17072.00 14514.81
06/30/87 16538.50 15247.80
07/31/87 19739.50 16020.87
08/31/87 19409.70 16618.45
09/30/87 20234.20 16254.50
10/31/87 14326.90 12753.28
11/30/87 16616.10 11702.41
12/31/87 16122.98 12592.97
01/31/88 13701.58 13123.13
02/29/88 14065.78 13734.67
03/31/88 15473.34 13310.27
04/30/88 15571.77 13458.01
05/31/88 15473.34 13575.09
06/30/88 15778.47 14198.19
07/31/88 15739.10 14144.24
08/31/88 14813.85 13663.33
09/30/88 14174.05 14245.39
10/31/88 14321.70 14641.41
11/30/88 14518.56 14432.04
12/31/88 14114.99 14684.60
01/31/89 14626.83 15759.52
02/28/89 15394.59 15367.10
03/31/89 14853.22 15725.16
04/30/89 14134.68 16541.29
05/31/89 13622.84 17211.21
06/30/89 14390.60 17113.11
07/31/89 14538.24 18658.42
08/31/89 15276.48 19024.13
09/30/89 15365.06 18946.13
10/31/89 15522.55 18506.58
11/30/89 17501.01 18884.12
12/31/89 17225.41 19337.33
01/31/90 17983.33 18039.80
02/28/90 17481.33 18272.51
03/31/90 16802.15 18756.73
04/30/90 14981.18 18287.82
05/31/90 16300.16 20070.88
06/30/90 15256.79 19934.40
07/31/90 16319.84 19870.61
08/31/90 16024.55 18074.30
09/30/90 16014.71 17194.08
10/31/90 13386.60 17120.15
11/30/90 13219.27 18226.11
12/31/90 14262.64 18734.62
01/31/91 12284.18 19551.45
02/28/91 13396.45 20949.38
03/31/91 13347.23 21456.35
04/30/91 12874.76 21507.85
05/31/91 13317.70 22436.99
06/30/91 14213.42 21409.37
07/31/91 14055.93 22407.05
08/31/91 12914.13 22938.10
09/30/91 12697.59 22555.03
10/31/91 13672.05 22857.27
11/30/91 13642.52 21936.12
12/31/91 13386.60 24445.61
01/31/92 13711.42 23990.92
02/29/92 13288.17 24302.81
03/31/92 12382.61 23828.90
04/30/92 11752.65 24529.47
05/31/92 12589.31 24649.67
06/30/92 13406.29 24282.39
07/31/92 14252.79 25275.53
08/31/92 13987.03 24757.39
09/30/92 13908.29 25049.52
10/31/92 13494.88 25137.20
11/30/92 12353.08 25994.38
12/31/92 12973.19 26314.11
01/31/93 12727.12 26535.14
02/28/93 13927.97 26896.02
03/31/93 15493.02 27463.53
04/30/93 17451.80 26798.91
05/31/93 19390.89 27517.12
06/30/93 20522.84 27596.92
07/31/93 22156.80 27486.53
08/31/93 20995.31 28528.27
09/30/93 18770.77 28308.61
10/31/93 21576.05 28894.59
11/30/93 21595.74 28620.10
12/31/93 23180.48 28966.40
01/31/94 23190.32 29951.26
02/28/94 22304.44 29139.58
03/31/94 22845.81 27869.09
04/30/94 20916.57 28225.82
05/31/94 21822.13 28688.72
06/30/94 20749.23 27985.85
07/31/94 20444.10 28903.78
08/31/94 21408.72 30088.84
09/30/94 23278.91 29351.66
10/31/94 21595.74 30012.07
11/30/94 19036.54 28919.03
12/31/94 19597.59 29347.90
01/31/95 17550.23 30108.89
02/28/95 18150.66 31282.24
Let's say you invested $10,000 in Fidelity Select American Gold Portfolio
on December 16, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $18,151 - an 81.51%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $31,282 over the same period - a 212.82% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Barrick Gold Corp. 13.7
Newmont Mining Corp. 8.1
Placer Dome Corp. 7.3
Homestake Mining Co. 5.9
Cambior, Inc. 4.3
Agnico Eagle Mines Ltd. 3.9
Euro-Nevada Mining Corp. 3.8
Franco Nevada Mining Corp. 3.8
Battle Mountain Gold Co. 3.7
Prime Resources Group, Inc. 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Gold Ores 81.4%
Miscellaneous Metal Ores,
NEC 1.9%
Copper Ores 1.5%
Gold & Silver Ores 1.0%
Metal Mining 0.6%
All Others 13.6%*
Row: 1, Col: 1, Value: 13.6
Row: 1, Col: 2, Value: 1.0
Row: 1, Col: 3, Value: 1.0
Row: 1, Col: 4, Value: 1.5
Row: 1, Col: 5, Value: 1.9
Row: 1, Col: 6, Value: 81.40000000000001
* INCLUDES SHORT-TERM INVESTMENTS
AMERICAN GOLD PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Malcolm MacNaught, Portfolio Manager of
Fidelity Select American Gold Portfolio
Q. HOW HAS THE FUND PERFORMED, MALCOLM?
A. The fund's return of -18.62% for the year ended February 28, 1995, is
disappointing. The S&P 500 returned 7.36% for the same period. But
investors should remember this is a highly specialized sector of the
market.
Q. WHY HAS THE FUND'S PERFORMANCE BEEN DOWN?
A. Gold is considered to be a hedge against inflation for investors who
want to protect their wealth. However, the Federal Reserve increased
interest rates twice during the past six months, and this has eased
inflation fears. Also, North American gold shares ran up to very high price
levels in 1993 and the market was due for a correction. Finally, the price
of gold bullion moved down from its high and this directly influences the
share price of the fund.
Q. WHAT'S YOUR STRATEGY IN SUCH AN UNFAVORABLE ENVIRONMENT?
A. The fund invests almost exclusively in North and South American gold
stocks and has been in a holding pattern for the past six months. The only
strategy that currently makes sense is to invest in the best companies with
growing reserves, growing production and growing earnings. From my
perspective, when the market for gold turns around, the fund will be
well-positioned in quality companies, the ones that perform the best over
time. I've also invested about 5% of the fund's assets in exploration
companies that have the potential to be important gold producing companies
in the next few years.
Q. WHAT STOCKS DID YOU LIKE AT THE END OF FEBRUARY?
A. Well, the fund's top 10 holdings didn't change much in the past six
months. Barrick Gold Corp., the fund's largest investment at the end of the
period, acquired Lac Minerals, making it even more attractive than it was
previously. As I've stated before, I think Barrick can double its
production over the next few years if its reserve growth continues to
exceed expectations. Though the stock has moved up and down a bit, I think
tremendous opportunities still exist for the company to find undiscovered
ore bodies. Other holdings such as Placer Dome and Homestake Mining are
good, defensive holdings for the fund. Newmont Mining Corp. has some very
exciting new projects in South America, Russia and possibly the Pacific
Basin.
Q. WHAT ELSE HAVE YOU DONE TO TRY TO CONTAIN THE FUND'S LOSSES?
A. The fund is permitted to have 50% of its assets in bullion, and I've
invested 2.5% of the fund in silver.
Q. SANTA FE PACIFIC, WHICH WAS A LARGE HOLDING IN THE FUND SIX MONTHS AGO,
IS NOW GONE FROM THE FUND . . .
A. Right. Santa Fe is illustrative of some of the risks associated with
investing in gold stocks. The company suffered a pit failure in its major
mine just before Christmas 1994, and its production may be as much as 10%
lower as a result. This means costs will be higher going forward; I decided
to sell the fund's position in the stock and let the market sort things
out.
Q. DO YOU REGRET SOME OF YOUR INVESTMENT DECISIONS OVER THE PAST SIX
MONTHS?
A. Sure. I could have had more of the fund in stable cash instruments such
as short-term Treasury bills instead of being so heavily invested in gold
shares. However, investors choose gold funds to track activities in the
gold markets and should expect the fund's performance to reflect conditions
in that market.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. With world production remaining high and the improbability of gold
breaking much above $400 per ounce, the next few months could be
frustrating. However, much depends on perceived inflation and foreign
buying of gold, which is trading at very low prices in some currencies. For
1995, I had earlier expected a significant incremental increase in supply
from Venezuela based on the number of projects under way. It now appears
that many of them may be postponed indefinitely. Thus, Chile, Peru and
Nevada may be the only geographic areas where there will be incremental
growth in the production of gold. If so, the two major corporate
benefactors should be Barrick Gold and Newmont Mining, two of the fund's
largest North American holdings. Lastly, I'd like to remind shareholders
that gold and precious metals are very volatile and anything can happen.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1995, more than
$278 million
MANAGER: Malcolm MacNaught, since 1985;
manager, Precious Metals and Minerals
Portfolio, since 1991; Fidelity Advisor Global
Resources Fund, since 1988; joined Fidelity in
1968
(checkmark)
AMERICAN GOLD PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 85.1%
SHARES VALUE (NOTE 1)
CANADA - 59.2%
HOLDING COMPANIES - 0.4%
HOLDING COMPANY OFFICES - 0.4%
Bolivar Goldfields Ltd. (a)(b) 941,100 $ 988,814 09760Q10
METALS & MINING - 1.2%
METAL MINING - 0.6%
Cominco Resources International Ltd. (a) 662,900 1,478,890 20044D10
Southernera Resources Ltd. (a)(b) 253,900 250,328 84390110
1,729,218
METAL MINING SERVICES - 0.0%
Tombstone Exploration Co. (a) 30,400 16,190 88990410
MISCELLANEOUS NONMETAL MINERALS - 0.6%
DIA Metropolitan Minerals Ltd. (a):
Class A 46,050 314,832 25243K20
Class B 169,500 1,341,801 25243K30
1,656,633
TOTAL METALS & MINING 3,402,041
PRECIOUS METALS - 57.6%
GOLD & SILVER ORES - 1.0%
GoldCorp, Inc. Class A 100,000 557,735 38095610
Greenstone Resources Ltd. (a) 299,800 312,841 39573W10
Mentor Exploration & Development
Co. Ltd. (a)(b) 188,000 1,860,315 58719310
2,730,891
GOLD ORES - 56.6%
Aber Resources Ltd. (a) 60,000 404,807 00291610
Agnico Eagle Mines Ltd. 1,108,700 10,771,423 00847410
Baja Gold, Inc. (a) 200,000 316,650 05690210
Barrick Gold Corp. 1,760,000 38,314,566 06790110
Bema Gold Corp. (a) 350,000 506,279 08135F10
Breakwater Resources Ltd. (a) 429,500 30,911 10690210
Cambior, Inc. 1,150,000 12,000,285 13201L10
Campbell Resources, Inc. (a) 1,320,000 778,958 13442292
Canaarc Resources Corp. (a) 545,400 785,000 13722D10
Cathedral Gold Corp. (a) 211,000 212,587 14890710
Echo Bay Mines Ltd. 560,000 5,138,353 27875110
Euro-Nevada Mining Corp. 550,000 10,736,391 29870P10
Franco Nevada Mining Corp. 230,000 10,469,216 35186010
Golden Knight Resources, Inc. 406,200 2,155,894 38109010
Golden Star Resources, Ltd. (a) 842,700 5,761,329 38119T10
Hemlo Gold Mines, Inc. 770,000 6,649,635 42366F10
Kinross Gold Corp. (a) 1,604,100 6,926,408 49690210
Orvana Minerals Corp. (a)(b) 1,352,800 3,164,050 68759M10
Pegasus Gold, Inc. (a) 190,000 2,033,931 70556K10
Placer Dome, Inc. 1,000,000 20,510,240 72590610
Prime Equities, Inc. (a) 55,883 56,303 74155692
Prime Resources Group, Inc. (a) 1,447,000 8,070,425 74157L10
Rayrock Yellowknife Resources, Inc. (a) 289,500 3,125,112 75509N10
Royal Oak Mines, Inc. (warrants) (a) 100,000 39,581 78051D12
Sudbury Contact Mines, Ltd. (a) 396,500 4,708,180 86462610
Wharf Resources Ltd. 570,000 4,409,702 96226010
158,076,216
TOTAL PRECIOUS METALS 160,807,107
TOTAL CANADA 165,197,962
PERU - 0.3%
PRECIOUS METALS - 0.3%
GOLD ORES - 0.3%
Buenaventura (CIA DE MIN) Class T (a) 227,904 814,670 17999B22
SHARES VALUE (NOTE 1)
UNITED KINGDOM - 0.1%
RETAIL & WHOLESALE, MISCELLANEOUS - 0.1%
RETAIL, GENERAL - 0.1%
Signet Group PLC (a) 737,500 $ 204,244 82999F22
USA - 25.5%
METALS & MINING - 3.4%
COPPER ORES - 1.5%
Freeport McMoRan Copper Co. Class A 200,000 4,200,000 35671D10
MISCELLANEOUS METAL ORES - 1.9%
Still Watermining Co. (a) 335,000 5,318,125 86074Q10
TOTAL METALS & MINING 9,518,125
PRECIOUS METALS - 21.4%
GOLD ORES - 21.4%
Amax Gold, Inc. (a) 833,100 4,269,638 02312010
Battle Mountain Gold Co. 1,100,000 10,450,000 07159310
Canyon Resources Corp. (a) 459,400 746,525 13886910
Coeur d'Alene Mines Corp. 151,700 2,294,463 19210810
Hecla Mining Co. (a) 300,000 2,812,500 42270410
Homestake Mining Co. 1,057,300 16,388,150 43761410
Newmont Mining Corp. 628,105 22,690,293 65163910
59,651,569
SECURITIES INDUSTRY - 0.6%
INVESTMENT MANAGERS - 0.6%
Pioneer Group, Inc. 85,000 1,657,500 72368410
SERVICES - 0.1%
JEWELRY, PRECIOUS METAL - 0.1%
Oroamerica, Inc. (a) 50,000 268,750 68702710
TOTAL USA 71,095,944
TOTAL COMMON STOCKS
(Cost $234,837,207) 237,312,820
CONVERTIBLE PREFERRED STOCKS - 3.1%
USA - 3.1%
PRECIOUS METALS - 3.1%
GOLD ORES - 3.1%
Battle Mountain Gold Co. $.8125 29,000 1,537,000 07159330
Newmont Mining Corp. depository
shares representing 1/2 share,
$1.375 (c) 138,800 7,252,300 65163930
TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost $10,365,123) 8,789,300
BULLION - 5.2%
TROY OUNCES
Gold Bullion (a) 20,431 7,694,142 68999410
Silver Bullion (5,000 oz Bar) 1,500,355 6,796,607 83799692
TOTAL BULLION
(Cost $15,018,958) 14,490,749
REPURCHASE AGREEMENTS - 6.6%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $18,490,122 $ 18,487,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $278,708,288) $ 279,079,869
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Bolivar Goldfields Ltd. (a) $ - $ - $ - $ 988,814
Mentor Exploration & Development
Co. Ltd. (a) - - - 1,860,315
Orvana Minerals Corp. (a) 795,400 287,541 - 3,164,050
Southernera Resources Ltd. (a) 234,550 - - 250,328
$ 1,029,950 $ 287,541 $ - $ 6,263,507
(a) Non-income producing
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $7,252,300 or 2.6% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $138,449,496 and $104,133,274, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $66,393 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balance during the periods for
which the loan was outstanding amounted to $3,380,000. The weighted average
interest rate paid was 4.2% (see Note 8 of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
Canada 59.2%
United States 40.4
Others (individually less than 1%) 0.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $280,178,878. Net unrealized depreciation
aggregated $1,099,009, of which $47,733,632 related to appreciated
investment securities and $48,832,641 related to depreciated investment
securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $35,816,000 of which $10,629,000, $2,503,000, $1,152,000,
$13,193,000 and $8,339,000 will expire on February 28, 1997, 1998, 1999,
2000, and 2001, respectively.
AMERICAN GOLD PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $18,487,000) (cost $278,708,288) - See $ 279,079,869
accompanying schedule
Cash 881
Receivable for investments sold 78,037
Receivable for fund shares sold 2,386,602
Dividends receivable 179,298
Redemption fees receivable 695
Other receivables 10,156
TOTAL ASSETS 281,735,538
LIABILITIES
Payable for fund shares redeemed $ 3,166,610
Accrued management fee 140,637
Other payables and 231,010
accrued expenses
TOTAL LIABILITIES 3,538,257
NET ASSETS $ 278,197,281
Net Assets consist of:
Paid in capital $ 315,204,296
Accumulated net investment (loss) (102,590
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (37,276,006
)
Net unrealized appreciation (depreciation) on investments 371,581
NET ASSETS, for 15,086,712 $ 278,197,281
shares outstanding
NET ASSET VALUE and redemption price per share ($278,197,281 (divided by) 15,086,712 shares) $18.44
Maximum offering price per share (100/97.00 of $18.44) $19.01
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 2,239,101
Dividends
Interest 1,909,550
TOTAL INCOME 4,148,651
EXPENSES
Management fee $ 2,170,533
Transfer agent 2,398,852
Fees
Redemption fees (229,334
)
Accounting fees and expenses 351,263
Non-interested trustees' compensation 5,975
Custodian fees and expenses 49,653
Registration fees 115,543
Audit 43,543
Legal 6,041
Interest 1,179
Reports to shareholders 13,457
Miscellaneous 3,497
Total expenses before reductions 4,930,202
Expense reductions (1,873 4,928,329
)
NET INVESTMENT INCOME (LOSS) (779,678
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including 3,341,799
realized gain (loss) of $251,691
and $(615,537) on sales of
investments in affiliated issuers
and precious metals, respectively)
Foreign currency transactions (15,060 3,326,739
)
Change in net unrealized appreciation (depreciation) on investment securities (79,195,428
)
NET GAIN (LOSS) (75,868,689
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (76,648,367
)
OTHER INFORMATION $1,481,818
Sales Charges Paid to FDC
Deferred sales charges withheld $43,732
by FDC
Exchange fees withheld by FSC $181,215
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (779,678 $ (1,607,332
Net investment income (loss) ) )
Net realized gain (loss) 3,326,739 5,091,181
Change in net unrealized appreciation (depreciation) (79,195,428 102,337,003
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (76,648,367 105,820,852
)
Share transactions 526,647,371 927,864,527
Net proceeds from sales of shares
Cost of shares redeemed (520,560,579 (857,107,198
) )
Paid in capital portion of redemption fees 1,352,412 2,794,982
Net increase (decrease) in net assets resulting from share transactions 7,439,204 73,552,311
TOTAL INCREASE (DECREASE) IN NET ASSETS (69,209,163 179,373,163
)
NET ASSETS
Beginning of period 347,406,444 168,033,281
End of period (including accumulated net investment (loss) of $(102,590) and $(102,615),
respectively) $ 278,197,281 $ 347,406,444
OTHER INFORMATION
Shares
Sold 24,289,524 46,202,228
Redeemed (24,535,614 (42,741,926
) )
Net increase (decrease) (246,090 3,460,302
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 22.66 $ 14.15 $ 11.94 $ 13.08 $ 15.22
Income from Investment Operations
Net investment (loss) (.05) (.11) (.05) (.06) (.04)
Net realized and unrealized gain (loss) (4.25) 8.44 2.16 (1.17) (2.23)
Total from investment operations (4.30) 8.33 2.11 (1.23) (2.27)
Redemption fees added to paid in capital .08 .18 .10 .09 .13
Net asset value, end of period $ 18.44 $ 22.66 $ 14.15 $ 11.94 $ 13.08
TOTAL RETURN B, C (18.62)% 60.14% 18.51% (8.72)% (14.06)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 278,197 $ 347,406 $ 168,033 $ 130,407 $ 164,137
Ratio of expenses to average net assets 1.41% 1.49% 1.59% A 1.75% 1.75%
Ratio of expenses to average net assets before expense reductions 1.41% 1.50% 1.59% A 1.75% 1.75%
Ratio of net investment income (loss) to average net assets (.22)% (.51)% (.44)% (.47)% (.29)%
A
Portfolio turnover rate 34% 39% 30% A 40% 38%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
ENERGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
ENERGY 0.04% 14.91% 103.84%
ENERGY
(INCL. 3% SALES CHARGE) -2.96% 11.46% 97.73%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
ENERGY 0.04% 2.82% 7.38%
ENERGY
(INCL. 3% SALES CHARGE) -2.96% 2.19% 7.05%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER 10 YEARS
Select Energy (060) Standard & Poor's 50
02/28/85 9700.00 10000.00
03/31/85 10077.47 10007.00
04/30/85 10217.92 9997.99
05/31/85 10077.47 10575.88
06/30/85 9679.58 10741.92
07/31/85 9782.06 10725.81
08/31/85 10136.08 10634.64
09/30/85 9819.33 10301.77
10/31/85 10406.25 10777.71
11/30/85 10573.94 11517.07
12/31/85 10182.66 12074.49
01/31/86 9483.94 12142.11
02/28/86 9269.67 13050.34
03/31/86 9223.09 13778.55
04/30/86 9241.72 13622.85
05/31/86 9670.27 14347.59
06/30/86 9698.22 14590.06
07/31/86 9092.66 13774.48
08/31/86 10294.46 14796.54
09/30/86 10182.66 13572.87
10/31/86 10452.83 14356.02
11/30/86 10667.11 14704.87
12/31/86 10741.64 14329.90
01/31/87 11878.22 16260.14
02/28/87 12111.13 16902.41
03/31/87 13117.28 17390.89
04/30/87 12744.63 17236.11
05/31/87 13191.81 17386.07
06/30/87 13648.31 18264.06
07/31/87 14356.34 19190.05
08/31/87 14272.50 19905.84
09/30/87 13965.06 19469.90
10/31/87 10275.82 15276.09
11/30/87 9847.28 14017.34
12/31/87 10548.32 15084.06
01/31/88 10941.13 15719.09
02/29/88 11333.93 16451.60
03/31/88 12138.71 15943.25
04/30/88 12598.58 16120.22
05/31/88 12138.71 16260.46
06/30/88 12272.84 17006.82
07/31/88 12349.48 16942.19
08/31/88 11880.03 16366.16
09/30/88 11745.90 17063.36
10/31/88 11851.29 17537.72
11/30/88 11880.03 17286.93
12/31/88 12229.95 17589.45
01/31/89 13154.08 18877.00
02/28/89 12947.62 18406.96
03/31/89 13694.79 18835.84
04/30/89 14156.86 19813.42
05/31/89 14323.99 20615.87
06/30/89 14618.92 20498.36
07/31/89 15228.45 22349.36
08/31/89 15562.71 22787.41
09/30/89 15808.49 22693.98
10/31/89 15700.35 22167.48
11/30/89 16290.22 22619.69
12/31/89 17467.48 23162.57
01/31/90 16687.60 21608.36
02/28/90 17207.52 21887.11
03/31/90 17217.52 22467.12
04/30/90 16637.60 21905.44
05/31/90 17647.46 24041.22
06/30/90 17231.55 23877.74
07/31/90 18405.22 23801.33
08/31/90 18735.98 21649.69
09/30/90 18682.63 20595.35
10/31/90 17722.36 20506.79
11/30/90 17530.30 21831.53
12/31/90 16682.79 22440.63
01/31/91 15602.21 23419.04
02/28/91 17057.69 25093.50
03/31/91 16826.13 25700.76
04/30/91 17013.58 25762.44
05/31/91 17112.82 26875.38
06/30/91 16350.43 25644.49
07/31/91 17190.05 26839.52
08/31/91 17521.48 27475.62
09/30/91 17344.72 27016.78
10/31/91 17863.95 27378.80
11/30/91 16538.24 26275.44
12/31/91 16688.67 29281.34
01/31/92 15795.63 28736.71
02/29/92 15817.96 29110.29
03/31/92 15360.27 28542.64
04/30/92 16409.60 29381.79
05/31/92 17191.00 29525.76
06/30/92 16340.32 29085.83
07/31/92 16776.81 30275.44
08/31/92 17078.99 29654.79
09/30/92 17179.72 30004.72
10/31/92 16441.05 30109.74
11/30/92 16060.52 31136.48
12/31/92 16290.06 31519.46
01/31/93 16904.35 31784.22
02/28/93 18019.17 32216.49
03/31/93 18940.61 32896.25
04/30/93 19304.94 32100.16
05/31/93 19885.45 32960.45
06/30/93 20147.26 33056.03
07/31/93 19999.28 32923.81
08/31/93 21581.47 34171.62
09/30/93 21456.26 33908.50
10/31/93 21148.93 34610.41
11/30/93 18587.83 34281.61
12/31/93 19410.34 34696.42
01/31/94 20449.96 35876.09
02/28/94 19764.76 34903.85
03/31/94 18807.82 33382.04
04/30/94 20244.49 33809.33
05/31/94 20458.71 34363.81
06/30/94 20351.60 33521.89
07/31/94 20661.04 34621.41
08/31/94 20315.89 36040.89
09/30/94 20161.17 35157.89
10/31/94 21303.72 35948.94
11/30/94 19994.55 34639.68
12/31/94 19490.38 35153.39
01/31/95 19023.69 36064.91
02/28/95 19772.84 37470.36
Let's say you invested $10,000 in Fidelity Select Energy Portfolio on
February 28, 1985, and paid a 3% sales charge. By February 28, 1995, your
investment would have grown to $19,773 - a 97.73% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $37,470 over
the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Elf Aquitaine sponsored ADR 8.5
Amerada Hess Corp. 7.9
Unocal Corp. 7.2
Phillips Petroleum Corp. 6.3
Total SA Class B sponsored ADR 5.9
Occidental Petroleum PLC ADR 4.2
Kerr-McGee Corp. 3.8
Schlumberger Ltd. 3.3
Amoco Corp. 3.1
Shell Transport & Trading PLC 2.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 7.8
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 2.9
Row: 1, Col: 4, Value: 6.2
Row: 1, Col: 5, Value: 39.0
Row: 1, Col: 6, Value: 42.0
Crude Petroleum & Gas 42.0%
Oil & Gas Exploration 39.0%
Oil & Gas Services 6.2%
Holding Company
Offices 2.9%
Plastics &
Synthetics Resins 2.1%
All Others 7.8%*
Includes short-term investments
*
ENERGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Albert Ruback,
Portfolio Manager of Fidelity Select Energy
Portfolio
Q. ALBERT, HOW DID THE FUND PERFORM?
A. For the 12 months ended February 28, 1995, the fund had a total return
of 0.04%. The S&P 500 returned 7.36% for the same period.
Q. WHY DID THE FUND LAG THE S&P 500?
A. There are many factors that impact stocks in this sector, including oil
prices, natural gas prices and refining margins - the difference between
the cost of producing oil and the price received for the refined product.
Over the past 12 months, fuel prices were hurt at different times by two
things: the weather and excess inventories. A generally cool summer and
warm winter drove down demand, and inventories kept supply high. The
combination resulted in falling product prices and pressured refining
margins. So as other parts of the economy were showing profit gains,
investors focused elsewhere.
Q. DOES THAT MEAN THAT ALL ENERGY COMPANIES WERE HURT BY THE COMMODITY
PRICE ENVIRONMENT?
A. No. Although prices definitely have an effect on energy companies, my
analysis focuses more on each company's cost structure. In the past six
months, the stocks that have done well are those of companies that are
undergoing, or have announced, restructuring and cost-cutting programs.
Examples include Amoco, Mobil and British Petroleum. The mindset of oil
company executives has changed from hoping or planning for crude price
increases to learning to live with essentially flat oil prices. Therefore,
in order to increase earnings, the companies have to cut costs. The market
rewards companies that increase earnings, and the best performer was
British Petroleum. The company's earnings stream has increased dramatically
because of a long-term cost-cutting program.
Q. WHAT ABOUT NATURAL GAS COMPANIES?
A. With natural gas, there are essentially two markets: North America and
the rest of the world. Outside of North America, natural gas prices
generally follow the direction of crude oil prices. In North America,
prices have collapsed recently, due to higher U.S. and Canadian production,
coupled with much higher inventory levels. The mild winter weather
exacerbated this problem by reducing demand. This has hurt exploration and
production - E&P - which affected stocks such as Apache, Burlington
Resources and Anadarko. Naturally, because of excess production and higher
inventories, I've cut back on these E&P stocks. Instead, I was moving
toward more diversified energy companies that were cutting costs and whose
stocks were cheap, as well as companies with profitable petrochemical
aspects of their business. Demand for petrochemical products has been high
as a result of worldwide growth.
Q. WHAT ARE SOME EXAMPLES OF THESE KINDS OF COMPANIES?
A. I found stocks of the domestic integrated companies to be more
inexpensive than international integrated ones. Amerada Hess, ARCO, UNOCAL,
Kerr-McGee and Phillips were attractive at the end of February. Occidental
was attractive because of the potential profitability of the petrochemical
aspect of its business. I expect the company may show solid earnings
improvement if the economic recovery continues to push demand for chemicals
worldwide.
Q. BESIDES E&P COMPANIES, ARE THERE OTHERS WHOSE PROSPECTS YOU'RE LESS
POSITIVE ABOUT IN THE NEAR FUTURE?
A. I've reduced the fund's holdings in companies focused on the refining
and marketing segment of the industry, such as Tosco, Ashland Oil, Diamond
Shamrock and Sun. These companies have had to spend a lot of money
upgrading their refineries in order to make them compatible with
environmental regulations. Most of the companies have added capacity at a
nominal cost while undergoing the upgrades. Even though refining margins
have declined, the companies aren't cutting back on production because of
the high fixed costs of the business. Because of the weakness in the U.S.
refining market, Amerada Hess has been a disappointing stock for the fund.
I'm optimistic about the stock, however, because of the company's cost
cutting and exposure to opportunities in new oil fields in the North Sea.
Q. AND WHAT POSITIONS HAVE YOU INCREASED?
A. Elf Aquitaine is one, because it announced a major restructuring
program, a major departure for a former French state-owned company. Total
is another French company, one that may be in a good position to keep
producing solid earnings and predictable flows of oil production.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. As far as the oil group is concerned, I believe refiners will
disappoint, while companies with petrochemical business could increase
earnings significantly. If the economy weakens, energy stocks may go down
because demand and earnings probably will decline.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1995, more than
$96 million
MANAGER: Albert Ruback, since December
1994; manager Fidelity Select Industrial
Equipment Portfolio, 1991-December 1994;
joined Fidelity in 1991
(checkmark)
ENERGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 98.2%
TROY OUNCES
CHEMICALS & PLASTICS - 2.1%
PLASTICS & SYNTHETIC RESINS - 2.1%
ARCO Chemical Co. 46,600 $ 1,980,503 00192010
ENERGY SERVICES - 6.5%
DRILLING - 0.3%
Precision Drilling Class A (a) 51,400 300,547 74022D10
OIL & GAS SERVICES - 6.2%
Halliburton Co. 70,000 2,607,500 40621610
Nowsco Well Service Ltd. 11,100 101,849 67012210
Schlumberger Ltd. 55,000 3,128,125 80685710
5,837,474
TOTAL ENERGY SERVICES 6,138,021
GAS - 2.9%
GAS TRANSMISSION - 1.5%
Enron Corp. 30,000 990,000 29356110
Trident NGL Holding, Inc. 38,300 402,150 89592610
1,392,150
GAS TRANSMISSION & DISTRIBUTION - 1.4%
Gas Natural SDG SA Series E 15,000 1,311,475 36699692
TOTAL GAS 2,703,625
HOLDING COMPANIES - 2.9%
HOLDING COMPANY OFFICES - 2.9%
Shell Transport & Trading PLC 40,700 2,726,900 82270360
INDUSTRIAL MACHINERY & EQUIPMENT - 0.0%
AIR & GAS COMPRESSORS - 0.0%
Enerflex Systems Ltd. 1,200 11,874 29265B10
OIL & GAS - 83.7%
CRUDE PETROLEUM & GAS - 42.0%
Apache Corp. 40,800 1,020,000 03741110
Atlantic Richfield Co. 20,000 2,192,500 04882510
Bellwether Exploration Co. (a) 50,000 243,750 07989520
British Borneo Petroleum 245,900 945,604 11099D22
Coho Resources, Inc. (a) 50,000 253,125 19248110
DEKALB Energy Corp. Class B (a) 29,000 623,500 24487410
Elf Aquitaine sponsored ADR 225,000 8,071,875 28626910
Global Natural Resources, Inc. (a) 50,000 375,000 37935510
Louis Dreyfus Natural Gas Corp. (a) 93,300 1,107,938 54601110
Maxus Energy Corp. (a) 500,000 2,687,500 57773010
Newfield Exploration Co. (a) 56,300 1,097,850 65129010
Norsk Hydro AS ADR 60,000 2,265,000 65653160
Nuevo Energy Corp. (a) 26,200 471,600 67050910
Occidental Petroleum Corp. 200,000 3,975,000 67459910
Paramount Resources Ltd. 31,000 295,599 69932010
Renaissance Energy Ltd. (a) 102,908 2,055,123 75966610
Renaissance Energy Ltd. (a)(b) 11,000 219,675 75966692
Rio Alto Exploration Ltd. (a) 317,500 971,086 76689210
Total SA Class B sponsored ADR 200,607 5,566,844 89151E10
Triton Energy Corp. (a) 40,000 1,245,000 89675010
Ulster Petroleums Ltd. (a) 168,900 516,587 90384010
United Meridian Corp. (a) 40,000 420,000 91086510
Vintage Petroleum, Inc. 96,400 1,674,950 92746010
YPF Sociedad Anonima sponsored ADR
representing Class D shares 75,000 1,425,000 98424510
39,720,106
NATURAL GAS LIQUIDS - 0.6%
Western Gas Resources, Inc. 32,100 585,825 95825910
TROY OUNCES
OIL & GAS EXPLORATION - 39.0%
Amerada Hess Corp. 152,400 $ 7,467,600 02355110
Amoco Corp. 50,000 2,962,500 03190510
British Petroleum PLC ADR 35,247 2,696,396 11088940
Chevron Corp. 44,000 2,090,000 16675110
Exxon Corp. 20,000 1,280,000 30229010
Kerr-McGee Corp. 70,600 3,556,475 49238610
Mobil Corp. 20,000 1,740,000 60705910
Phillips Petroleum Co. 178,900 5,970,788 71850710
Royal Dutch Petroleum Co. 20,000 2,242,500 78025770
Unocal Corp. 241,096 6,841,099 91528910
36,847,358
OIL FIELD EQUIPMENT - 1.1%
Camco International, Inc. 58,700 1,085,950 13263210
PETROLEUM REFINERS - 1.0%
Crown Central Petroleum Corp. Class B (a) 18,100 239,825 22821930
Diamond Shamrock R&M, Inc. 16,400 410,000 25274710
Tesoro Petroleum Corp. (a) 30,000 311,250 88160910
961,075
TOTAL OIL & GAS 79,200,314
TRUCKING & FREIGHT - 0.1%
TRUCKING, LONG DISTANCE - 0.1%
Trimac Ltd. (a) 15,500 133,856 89620810
TOTAL COMMON STOCKS
(Cost $92,999,199) 92,895,093
REPURCHASE AGREEMENTS - 1.8%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $1,697,287 1,697,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $94,696,199) $ 94,592,093
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $219,675 or 0.2% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $103,820,158 and $140,322,740, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $96,604 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $4,955,000 and $4,186,000,
respectively. The weighted average interest rate paid was 6.0% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 66.3%
France 14.4
United Kingdom 6.7
Canada 4.9
Norway 2.4
Netherland 2.4
Argentina 1.5
Spain 1.4
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $95,198,672. Net unrealized depreciation aggregated
$606,579, of which $3,932,965 related to appreciated investment securities
and $4,539,544 related to depreciated investment securities.
The fund hereby designates $1,258,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
ENERGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $1,697,000) (cost $94,696,199) - See $ 94,592,093
accompanying schedule
Cash 87
Receivable for investments sold 1,940,678
Receivable for fund shares sold 826,498
Dividends receivable 298,062
Redemption fees receivable 341
Other receivables 3,980
TOTAL ASSETS 97,661,739
LIABILITIES
Payable for fund shares redeemed $ 1,491,339
Accrued management fee 49,128
Other payables and 98,658
accrued expenses
TOTAL LIABILITIES 1,639,125
NET ASSETS $ 96,022,614
Net Assets consist of:
Paid in capital $ 95,013,184
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,113,536
Net unrealized appreciation (depreciation) on investments (104,106
)
NET ASSETS, for 5,964,577 $ 96,022,614
shares outstanding
NET ASSET VALUE and redemption price per share ($96,022,614 (divided by) 5,964,577 shares) $16.10
Maximum offering price per share (100/97.00 of $16.10) $16.60
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 1,966,681
Dividends
Interest (including security lending fees of $2,915) 402,434
TOTAL INCOME 2,369,115
EXPENSES
Management fee $ 646,577
Transfer agent 1,193,841
Fees
Redemption fees (119,631
)
Accounting and security lending fees 116,560
Non-interested trustees' compensation 2,192
Custodian fees and expenses 15,899
Registration fees 47,477
Audit 24,154
Legal 1,354
Interest 2,107
Reports to shareholders 6,470
Miscellaneous 914
Total expenses before reductions 1,937,914
Expense reductions (9,979 1,927,935
)
NET INVESTMENT INCOME 441,180
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 3,967,349
Foreign currency transactions 304 3,967,653
Change in net unrealized appreciation (depreciation) on investment securities (6,553,635
)
NET GAIN (LOSS) (2,585,982
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,144,802
)
OTHER INFORMATION $508,448
Sales Charges Paid to FDC
Deferred sales charges withheld $19,469
by FDC
Exchange fees withheld by FSC $93,885
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 441,180 $ 467,695
Net investment income
Net realized gain (loss) 3,967,653 11,660,936
Change in net unrealized appreciation (depreciation) (6,553,635 35,273
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,144,802 12,163,904
)
Distributions to shareholders: (468,393 (210,175
From net investment income ) )
From net realized gain (3,119,569 (2,444,037
) )
TOTAL DISTRIBUTIONS (3,587,962 (2,654,212
) )
Share transactions 139,154,943 307,692,300
Net proceeds from sales of shares
Reinvestment of distributions 3,509,410 2,596,445
Cost of shares redeemed (186,610,132 (353,996,623
) )
Paid in capital portion of redemption fees 211,181 555,239
Net increase (decrease) in net assets resulting from share transactions (43,734,598 (43,152,639
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (49,467,362 (33,642,947
) )
NET ASSETS
Beginning of period 145,489,976 179,132,923
End of period (including undistributed net investment income of $0 and $354,166, respectively) $ 96,022,614 $ 145,489,976
OTHER INFORMATION
Shares
Sold 8,177,307 17,743,944
Issued in reinvestment of distributions 222,729 166,316
Redeemed (11,129,608 (20,523,434
) )
Net increase (decrease) (2,729,572 (2,613,174
) )
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.73 $ 15.84 $ 14.70 $ 15.43 $ 16.64
Income from Investment Operations
Net investment income .07 .06 .23 .17 .16
Net realized and unrealized gain (loss) (.11) 1.35 1.16 (.75) .15
Total from investment operations (.04) 1.41 1.39 (.58) .31
Less Distributions (.08) E (.03) (.27) (.16) (.15)
From net investment income
From net realized gain (.54) E (.57) - (.02) (1.43)
Total distributions (.62) (.60) (.27) (.18) (1.58)
Redemption fees added to paid in capital .03 .08 .02 .03 .06
Net asset value, end of period $ 16.10 $ 16.73 $ 15.84 $ 14.70 $ 15.43
TOTAL RETURN B, C .04% 9.69% 9.81% (3.55)% 2.26%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 96,023 $ 145,490 $ 179,133 $ 77,334 $ 92,611
Ratio of expenses to average net assets 1.85% 1.66% 1.71% A 1.78% 1.79%
Ratio of expenses to average net assets before expense reductions 1.85% 1.67% 1.71% A 1.78% 1.79%
Ratio of net investment income to average net assets .42% .37% 1.88% A 1.16% .99%
Portfolio turnover rate 106% 157% 72% A 81% 61%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
ENERGY SERVICE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
ENERGY SERVICE 7.60% 2.78% 26.21%
ENERGY SERVICE
(INCL. 3% SALES CHARGE) 4.37% -0.31% 22.43%
S&P 500 7.36% 71.20% 212.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 16, 1985. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
ENERGY SERVICE 7.60% 0.55% 2.56%
ENERGY SERVICE
(INCL. 3% SALES CHARGE) 4.37% -0.06% 2.22%
S&P 500 7.36% 11.35% 13.18%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Energy ServicStandard & Poor's 50
12/16/85 9700.00 10000.00
12/31/85 9855.20 10080.42
01/31/86 9118.00 10136.87
02/28/86 8739.70 10895.11
03/31/86 8671.80 11503.06
04/30/86 8555.40 11373.07
05/31/86 9050.10 11978.12
06/30/86 8885.20 12180.55
07/31/86 7614.50 11499.66
08/31/86 8371.10 12352.93
09/30/86 8235.30 11331.35
10/31/86 7944.30 11985.16
11/30/86 8215.90 12276.40
12/31/86 8303.20 11963.36
01/31/87 9234.40 13574.82
02/28/87 9622.40 14111.03
03/31/87 10534.20 14518.83
04/30/87 10534.20 14389.62
05/31/87 11349.00 14514.81
06/30/87 12464.50 15247.80
07/31/87 13279.30 16020.87
08/31/87 12270.50 16618.45
09/30/87 11872.80 16254.50
10/31/87 7633.90 12753.28
11/30/87 6799.70 11702.41
12/31/87 7323.50 12592.97
01/31/88 7614.50 13123.13
02/29/88 8283.80 13734.67
03/31/88 8768.80 13310.27
04/30/88 8943.40 13458.01
05/31/88 8332.30 13575.09
06/30/88 7857.00 14198.19
07/31/88 7730.90 14144.24
08/31/88 7876.40 13663.33
09/30/88 7536.90 14245.39
10/31/88 7284.70 14641.41
11/30/88 6974.30 14432.04
12/31/88 7294.40 14684.60
01/31/89 7740.60 15759.52
02/28/89 7827.90 15367.10
03/31/89 8322.60 15725.16
04/30/89 8720.30 16541.29
05/31/89 8875.50 17211.21
06/30/89 9166.50 17113.11
07/31/89 9680.60 18658.42
08/31/89 10136.50 19024.13
09/30/89 9991.00 18946.13
10/31/89 9496.30 18506.58
11/30/89 10311.10 18884.12
12/31/89 11630.30 19337.33
01/31/90 10883.40 18039.80
02/28/90 11911.60 18272.51
03/31/90 12483.90 18756.73
04/30/90 11824.30 18287.82
05/31/90 13812.80 20070.88
06/30/90 13104.70 19934.40
07/31/90 14336.60 19870.61
08/31/90 14084.40 18074.30
09/30/90 13812.80 17194.08
10/31/90 12076.50 17120.15
11/30/90 12260.80 18226.11
12/31/90 11834.40 18734.62
01/31/91 11300.01 19551.45
02/28/91 13116.95 20949.38
03/31/91 12096.74 21456.35
04/30/91 12155.04 21507.85
05/31/91 12475.68 22436.99
06/30/91 10843.35 21409.37
07/31/91 11659.51 22407.05
08/31/91 11533.20 22938.10
09/30/91 10474.13 22555.03
10/31/91 10629.59 22857.27
11/30/91 9356.76 21936.12
12/31/91 9055.55 24445.61
01/31/92 8929.24 23990.92
02/29/92 9113.85 24302.81
03/31/92 8462.86 23828.90
04/30/92 9162.43 24529.47
05/31/92 9891.15 24649.67
06/30/92 9317.89 24282.39
07/31/92 9706.54 25275.53
08/31/92 10202.07 24757.39
09/30/92 10512.99 25049.52
10/31/92 9968.88 25137.20
11/30/92 9764.84 25994.38
12/31/92 9366.47 26314.11
01/31/93 9735.69 26535.14
02/28/93 10697.60 26896.02
03/31/93 11542.92 27463.53
04/30/93 12165.15 26798.91
05/31/93 12729.16 27517.12
06/30/93 12661.09 27596.92
07/31/93 12836.13 27486.53
08/31/93 13283.45 28528.27
09/30/93 12894.47 28308.61
10/31/93 12709.71 28894.59
11/30/93 11367.75 28620.10
12/31/93 11329.36 28966.40
01/31/94 11436.70 29951.26
02/28/94 11378.15 29139.58
03/31/94 10529.18 27869.09
04/30/94 11079.70 28225.82
05/31/94 11573.25 28688.72
06/30/94 11925.78 27985.85
07/31/94 12147.37 28903.78
08/31/94 11663.90 30088.84
09/30/94 12107.08 29351.66
10/31/94 12590.56 30012.07
11/30/94 11935.85 28919.03
12/31/94 11393.65 29347.90
01/31/95 11465.24 30108.89
02/28/95 12242.54 31282.24
Let's say you invested $10,000 in Fidelity Select Energy Service Portfolio
on December 16, 1985 when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $12,243 - a 22.43%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $31,282 over the same period - a 212.82% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Schlumberger Ltd. 10.3
Halliburton Co. 10.1
Western Atlas, Inc. 8.4
Western Co. of North America 6.3
Camco International, Inc. 3.9
BJ Services Co. 3.7
Baker Hughes, Inc. 3.6
Enterra Corp. 2.4
Coflexip sponsored ADR 2.3
McDermott International, Inc. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 24.8
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 6.1
Row: 1, Col: 4, Value: 8.4
Row: 1, Col: 5, Value: 8.699999999999999
Row: 1, Col: 6, Value: 48.2
Oil & Gas Services 48.2%
Drilling 8.7%
Surveying Services 8.4%
Oil & Gas Exploration 6.1%
Oil Field Equipment 3.8%
All others 24.8%*
* INCLUDES SHORT-TERM INVESTMENTS
ENERGY SERVICE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Daniel Pickering,
Portfolio Manager of Fidelity Select Energy
Service Portfolio
Q. DAN, HOW HAS THE FUND PERFORMED?
A. For the 12 months ended February 28, 1995, the fund had a total return
of 7.60%, slightly beating the S&P 500, which returned 7.36% for the same
period.
Q. WHAT HELPED THE FUND MATCH THE PERFORMANCE OF THE BROAD MARKET?
A. The fund performed well in part because I concentrated its investments
on a small number of selected stocks that generally ended up doing well.
These stocks performed well for several reasons. First, the international
rig count - the indicator of oil and natural gas drilling activity -
started to pick up in the latter half of the year, after having trended
lower during the first six months. Second, many companies started showing
improving earnings due to cost cutting and consolidation. Finally, stock
prices in the sector had been so depressed during the past five years or so
that inexpensive stock prices coupled with earnings turnarounds and
cost-cutting stories attracted investors.
Q. WHAT WERE SOME OF THE STOCKS WHOSE PERFORMANCE HELPED THE FUND?
A. Western Company, which focuses on pressure pumping, was one. The company
matched up well with BJ Services, which ended up acquiring Western at a
profit to Western shareholders. Halliburton, another pressure pumping
company, also did well mainly because of increased profit margins due to
cost cutting. ICO is a small company that coats and inspects tubes for oil
field work. It benefited from acquiring several similar companies,
assimilating their operations and cutting costs. Finally, Coflexip, a
flexible pipe company taking advantage of a trend toward deep water and
sub-sea drilling, grew due to an acquisition, and attracted attention due
to an inexpensive stock price.
Q. WHAT HAS THE ENERGY SERVICE ENVIRONMENT BEEN LIKE, IN GENERAL?
A. There has been an increase in drilling activity during the last half of
1994, but it hasn't seemed sustainable. There was a short-term increase in
natural gas prices in the first half of 1994, but they have tailed off
since, mainly due to increased supply and warm weather. There is generally
a lag between a drop in prices and a drop in drilling activity, so energy
service companies hadn't seen a marked drop in activity as of the end of
the period. As far as the price of oil is concerned, it's been pretty
stable and the companies that have done well are those that have cut costs
to increase profit margins. They may do even better going forward, because
demand has been growing while supply remained somewhat tight, meaning oil's
price might rise. Looking forward, I'll try to position the fund toward
companies that won't be affected by lower North American gas prices - which
would highlight the more international oil-driven names in the fund's top
10 holdings at the end of February such as Schlumberger - as well as
cost-cutting stories, inexpensive stocks and potential consolidations.
Q. WHILE THE FUND PERFORMED WELL, THERE MUST HAVE BEEN SOME STOCKS THAT
WERE DISAPPOINTMENTS . . .
A. Sure. Drilling activity in the Gulf of Mexico has slowed, hurting Noble
Drilling. The drilling industry has high fixed costs, so when gas prices
dropped and drilling slowed, earnings suffered. The fund still owns Noble
stock because the company has the most rigs in the Gulf and is poised to do
well should the situation reverse. The stock of Western Atlas, a seismic
and wire line company, dropped due to a weak outlook for its marine seismic
business. And Weatherford International stumbled because of the drop in gas
prices and a failure to meet earnings expectations. I've bought more of
this stock because it appears most of its troubles are behind it, it has a
good balance sheet and it has good international exposure.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I'd like to divide my outlook into two parts. The first is North
America. Performance in energy service will be driven by gas and gas
prices. We're in a down cycle now, but if the market anticipates a better
price and drilling situation for early to middle 1996, the stocks could
rebound. In that case, I'll start looking at the stocks that have been
hardest hit, such as drilling companies. On the international side, it's
likely things will get better due to a pick-up in activity in the North Sea
and West Africa. I believe companies with strong international exposure
such as Schlumberger, Baker-Hughes and Halliburton could benefit from this
trend. I always look at stock valuations, so I'll be interested in trimming
stocks that become expensive and adding to positions where the stock is
cheap. Energy service stock prices have been low compared to their
historical range, and I'm hoping they'll move up to at least the middle of
that range, as the international outlook improves.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1995, more than
$63 million
MANAGER: Daniel Pickering, since December
1994; manager Fidelity Select Natural Gas
Portfolio, since February 1995; equity analyst,
since August 1994; joined Fidelity in August
1994
(checkmark)
ENERGY SERVICE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 81.0%
TROY OUNCES
BUILDING MATERIALS - 2.3%
FABRICATED PIPE & FITTINGS - 2.3%
Coflexip sponsored ADR 59,711 $ 1,507,703 19238410
COMPUTER SERVICES & SOFTWARE - 0.6%
CAD/CAM/CAE - 0.6%
Landmark Graphics Corp. (a) 20,000 415,000 51491310
ELECTRONIC INSTRUMENTS - 0.3%
LABORATORY ANALYTICAL INSTRUMENTS - 0.3%
Numar Corp. (a) 20,000 185,000 67052E10
ENERGY SERVICES - 55.1%
DRILLING - 8.7%
Arethusa Offshore Ltd. (a) 57,100 720,888 03999792
Atwood Oceanics, Inc. (a) 89,200 1,115,000 05009510
Energy Service Co., Inc. (a) 50,000 587,500 29271940
Marine Drilling Cos., Inc. (a) 134,500 336,250 56824020
Nabors Industries, Inc. (a) 80,000 530,000 62956810
Noble Drilling Corp. (a) 233,950 1,286,725 65504210
Reading & Bates Corp. (a) 40,000 300,000 75528180
Sonat Offshore Drilling, Inc. 40,000 835,000 83542010
Tucker Drilling Co., Inc. (a) 7,000 46,813 89865210
5,758,176
OIL & GAS SERVICES - 46.4%
BJ Services Co. (a) 130,931 2,438,590 05548210
Baker Hughes, Inc. 125,000 2,406,250 05722410
Dreco Energy Services Ltd. Class A (a) 60,000 525,000 26152820
Enterra Corp. (a) 89,300 1,607,400 29380510
Global Industries Ltd. (a) 13,900 337,075 37933610
Gulfmark International, Inc. (a) 15,100 241,600 40262810
Halliburton Co. 180,000 6,705,000 40621610
Input/Output, Inc. (a) 25,000 656,250 45765210
McDermott International, Inc. 50,000 1,400,000 58003710
Petroleum Helicopters, Inc. 28,000 245,000 71660410
Petroleum Helicopters, Inc. (non vtg.) 8,300 66,400 71660420
Pride Petroleum Services, Inc. (a) 90,000 495,000 74154110
Schlumberger Ltd. 120,000 6,825,000 80685710
Smith International, Inc. (a) 35,000 468,125 83211010
Tidewater, Inc. 37,200 730,050 88642310
Tuboscope Vetco International Corp. (a) 85,320 671,895 89860010
Weatherford International, Inc. (a) 87,600 755,550 94707610
Western Co. of North America (a) 221,000 4,171,375 95804340
30,745,560
TOTAL ENERGY SERVICES 36,503,736
INDUSTRIAL MACHINERY & EQUIPMENT - 1.5%
STEAM, GAS, HYDRAULIC TURBINES - 1.5%
McDermott (J. Ray) SA (a) 44,700 994,575 58099A22
IRON & STEEL - 2.0%
FABRICATED METAL PRODUCTS - 2.0%
ICO, Inc. 255,000 1,338,749 44929420
METALS & MINING - 0.2%
MISCELLANEOUS METAL ORES - 0.2%
Still Watermining Co. (a) 8,000 127,000 86074Q10
OIL & GAS - 10.6%
CRUDE PETROLEUM & GAS - 0.7%
Unit Corp. unit
(3 common & 1 warrant) (a) 50,700 430,950 90921820
OIL & GAS EXPLORATION - 6.1%
Amerada Hess Corp. 17,000 833,000 02355110
Amoco Corp. 4,000 237,000 03190510
British Petroleum PLC ADR 8,000 612,000 11088940
TROY OUNCES
Mobil Corp. 6,000 $ 522,000 60705910
Phillips Petroleum Co. 30,000 1,001,250 71850710
Unocal Corp. 30,000 851,250 91528910
4,056,500
OIL FIELD EQUIPMENT - 3.8%
Camco International, Inc. 138,100 2,554,850 13263210
TOTAL OIL & GAS 7,042,300
SERVICES - 8.4%
SURVEYING SERVICES - 8.4%
Western Atlas, Inc. 135,000 5,568,750 95767410
TOTAL COMMON STOCKS
(Cost $55,221,675) 53,682,813
CONVERTIBLE PREFERRED STOCKS - 1.5%
INDUSTRIAL MACHINERY & EQUIPMENT --1.5%
STEAM, GAS, HYDRAULIC TURBINES - 1.5%
McDermott (J. Ray) Series B $2.25
(Cost $722,849) 20,000 977,500 58099A23
CORPORATE BONDS - 1.8%
PRINCIPAL
AMOUNT
NONCONVERTIBLE BONDS - 1.8%
ENERGY SERVICES - 1.8%
OIL & GAS SERVICES - 1.8%
Tuboscope Vetco International, Inc.
gtd. 10 3/4%, 4/15/03
(Cost 1,200,000) $ 1,200,000 1,203,000 898602AA
REPURCHASE AGREEMENTS - 15.7%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $10,387,754 10,386,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $67,530,524) $ 66,249,313
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Service Fracturing Co. $ - $ 234,835 $ - $ -
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $125,237,626 and $110,386,326, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $105,206 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $14,032,000 and $3,891,059,
respectively. The weighted average interest rate paid was 5.0% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $68,331,070. Net unrealized depreciation aggregated
$2,081,757, of which $2,770,157 related to appreciated investment
securities and $4,851,914 related to depreciated investment securities.
The fund hereby designates $1,508,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its fiscal year ending February 28,1996
$1,641,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
ENERGY SERVICE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $10,386,000) (cost $67,530,524) - See $ 66,249,313
accompanying schedule
Cash 7,639
Receivable for investments sold 454,155
Receivable for fund shares sold 5,222,013
Dividends receivable 98,120
Interest receivable 48,375
Redemption fees receivable 60
TOTAL ASSETS 72,079,675
LIABILITIES
Payable for investments purchased $ 7,021,565
Payable for fund shares redeemed 1,182,537
Accrued management fee 27,791
Other payables and accrued expenses 53,336
TOTAL LIABILITIES 8,285,229
NET ASSETS $ 63,794,446
Net Assets consist of:
Paid in capital $ 66,602,711
Undistributed net investment income 66,450
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (1,593,504
)
Net unrealized appreciation (depreciation) on investments (1,281,211
)
NET ASSETS, for 5,330,340 shares outstanding $ 63,794,446
NET ASSET VALUE and redemption price per share ($63,794,446 (divided by) 5,330,340 shares) $11.97
Maximum offering price per share (100/97.00 of $11.97) $12.34
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 673,080
Dividends
Interest (including security lending fees of $1,063) 507,639
TOTAL INCOME 1,180,719
EXPENSES
Management fee $ 369,132
Transfer agent 636,213
Fees
Redemption fees (83,835
)
Accounting and security lending fees 61,676
Non-interested trustees' compensation 1,517
Custodian fees and expenses 13,338
Registration fees 28,952
Audit 21,349
Legal 781
Interest 21,944
Reports to shareholders 3,311
Miscellaneous 846
Total expenses before reductions 1,075,224
Expense reductions (9,178 1,066,046
)
NET INVESTMENT INCOME 114,673
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities including realized gain (loss) $129,328 on sales of investments of affiliated
issuers. 274,610
Foreign currency transactions (48 274,562
)
Change in net unrealized appreciation (depreciation) on investment securities 74,964
NET GAIN (LOSS) 349,526
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 464,199
OTHER INFORMATION $348,174
Sales Charges Paid to FDC
Deferred sales charges withheld $8,516
by FDC
Exchange fees withheld by FSC $68,663
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 114,673 $ 214,893
Net investment income
Net realized gain (loss) 274,562 17,604,019
Change in net unrealized appreciation (depreciation) 74,964 (4,993,642
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 464,199 12,825,270
Distributions to shareholders: (50,886 (269,046
From net investment income ) )
In excess of net investment income (42,014 -
)
From net realized gain (1,312,181 -
)
In excess of net realized gain (498,798 -
)
TOTAL DISTRIBUTIONS (1,903,879 (269,046
) )
Share transactions 244,302,548 359,408,419
Net proceeds from sales of shares
Reinvestment of distributions 1,876,010 265,568
Cost of shares redeemed (222,407,429 (417,772,180
) )
Paid in capital portion of redemption fees 606,169 1,164,835
Net increase (decrease) in net assets resulting from share transactions 24,377,298 (56,933,358
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 22,937,618 (44,377,134
)
NET ASSETS
Beginning of period 40,856,828 85,233,962
End of period (including undistributed net investment income of $66,450 and $44,725, respectively) $ 63,794,446 $ 40,856,828
OTHER INFORMATION
Shares
Sold 20,716,490 29,627,725
Issued in reinvestment of distributions 177,460 22,698
Redeemed (19,068,782 (33,889,248
) )
Net increase (decrease) 1,825,168 (4,238,825
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
Net asset value, beginning of period $ 11.66 $ 11.01 $ 9.43 $ 12.51 $ 12.19
Income from Investment Operations
Net investment income (loss) .02 .03 .01 (.12) -
Net realized and unrealized gain (loss) .67 .51 1.47 (3.11) .15
Total from investment operations .69 .54 1.48 (3.23) .15
Less Distributions (.01) (.05) - - (.02)
From net investment income
In excess of net investment income (.01) - - - -
From net realized gain (.35) - - - -
In excess of net realized gain (.13) - - - -
Total distributions (.50) (.05) - - (.02)
Redemption fees added to paid in capital .12 .16 .10 .15 .19
Net asset value, end of period $ 11.97 $ 11.66 $ 11.01 $ 9.43 $ 12.51
TOTAL RETURN B, C 7.60% 6.36% 16.76% (24.62)% 2.80%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 63,794 $ 40,857 $ 85,234 $ 41,322 $ 73,398
Ratio of expenses to average net assets 1.79% 1.65% 1.76% A 2.07% 1.82%
Ratio of expenses to average net assets before expense reductions 1.81% 1.66% 1.76% A 2.07% 1.82%
Ratio of net investment income (loss) to average net assets .19% .23% .13% A (1.13)% (.02)%
Portfolio turnover rate 209% 137% 236% A 89% 62%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
NATURAL GAS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1995 YEAR FUND
NATURAL GAS -5.06% -8.70%
NATURAL GAS
(INCL. 3% SALES CHARGE) -7.91% -11.44%
S&P 500 7.36% 15.59%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
April 21, 1993. You can compare these figures to the performance of the S&P
500 - a common proxy for the U.S. stock market. This benchmark includes
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED FEBRUARY 28, 1995 PAST 1 LIFE OF
YEAR FUND
NATURAL GAS -5.06% -4.78%
NATURAL GAS
(INCL. 3% SALES CHARGE) -7.91% -6.32%
S&P 500 7.36% 8.10%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Fidelity Select NatuStandard & Poor's 50
04/21/93 9700.00 10000.00
04/30/93 9515.70 9902.04
05/31/93 9670.90 10167.41
06/30/93 9952.20 10196.90
07/31/93 9913.40 10156.11
08/31/93 10767.00 10541.02
09/30/93 10582.70 10459.86
10/31/93 10010.40 10676.38
11/30/93 9156.80 10574.95
12/31/93 9209.91 10702.91
01/31/94 9672.38 11066.81
02/28/94 9327.99 10766.90
03/31/94 8993.44 10297.46
04/30/94 9692.06 10429.27
05/31/94 9613.34 10600.31
06/30/94 9662.54 10340.60
07/31/94 9603.50 10679.77
08/31/94 9288.63 11117.64
09/30/94 9229.59 10845.26
10/31/94 9554.30 11089.28
11/30/94 8717.93 10685.41
12/31/94 8580.06 10843.87
01/31/95 8313.78 11125.05
02/28/95 8856.20 11558.60
Let's say you invested $10,000 in Fidelity Select Natural Gas Portfolio on
April 21, 1993, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would be valued at $8,856 - an 11.44%
decrease. That compares to $10,000 invested in the S&P 500, which would
have grown to $11,559 over the same period - a 15.59% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Anadarko Petroleum Corp. 6.9
Burlington Resources, Inc. 6.5
Pacific Enterprises 4.1
Enron Corp. 3.9
Enron Oil & Gas Co. 3.9
Noble Affiliates, Inc. 3.6
Amerada Hess Corp. 3.5
British Petroleum PLC ADR 3.1
Columbia Gas System, Inc. (The) 3.0
Union Texas Petroleum Holdings, Inc. 2.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 18.6
Row: 1, Col: 2, Value: 8.800000000000001
Row: 1, Col: 3, Value: 9.6
Row: 1, Col: 4, Value: 10.5
Row: 1, Col: 5, Value: 10.6
Row: 1, Col: 6, Value: 41.9
Crude Petroleum & Gas 41.9%
Oil & Gas Exploration 10.6%
Gas Distribution 10.5 %
Gas Transmission 9.6%
Gas Transmission & Distribution 8.8%
All Others 18.6%*
* INCLUDES SHORT-TERM INVESTMENTS
NATURAL GAS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Daniel Pickering,
Portfolio Manager
of Fidelity Select
Natural Gas Portfolio
Q. DAN, HOW HAS THE FUND PERFORMED?
A. The fund had a -5.06% return for the year ended February 28. That was
substantially behind the 7.36% return of the S&P 500 over the same period.
That said, the fund came out ahead of many of the stocks that dominate the
sector.
Q. WERE WEAK GAS PRICES THE ROOT OF THE SECTOR'S PROBLEMS?
A. In large part, yes. There was a lot of drilling in 1993 and 1994, which
led to a rise in production. This only added to a decade-old glut in
supply. As a result, the price of natural gas fell from $2.30 per thousand
cubic feet in February 1994 to $1.48 a year later. That, of course, limited
the gas companies' earnings. Another negative was the warm winter, which
meant we didn't have the usual seasonal increase in demand pushing prices
up. Gas stocks did, however, pick up in mid-January as investors
anticipated a recovery in gas prices. It would take a slowdown in
production or an unforeseen event - like Hurricane Andrew in 1992 - to
knock out some supply and send gas prices up again.
Q. GIVEN THE BLEAK PICTURE FOR MOST OF THE YEAR, WHAT STRATEGIES WORKED?
A. Emphasizing gas producers definitely helped. They did better than
pipelines or local distribution companies (LDCs) which, because investors
often buy them for their dividends, were hurt by both lower gas prices and
higher interest rates. When we thought the bond market was near its bottom
early last fall, we started increasing our focus on pipelines - buying
companies like Williams Companies and Sonat. But results were
disappointing, so in November we cut back. In contrast, gas producers were
just hurt by lower gas prices. So they didn't go down as much, although
they did badly until the middle of January. Seven of the fund's top 10
stocks on February 28 were producers, including Anadarko Petroleum,
Burlington Resources, Amerada Hess, and Enron Oil & Gas. Most of these had
flat or small negative returns for the period.
Q. WHICH STOCKS IN PARTICULAR HELPED CONTAIN THE FUND'S LOSSES?
A. Anadarko made the biggest positive contribution for the year, although
it went through a tough time from May to mid-January. It was an example of
a good value - in this case, a cheap price compared to the company's
potential for finding gas and oil reserves. Pacific Enterprises, an LDC,
was a nice surprise; its price rose more than 15% from September through
February. With a 5% dividend yield, the stock benefited from the bond
market's turnaround during the first two months of 1995. Plus, late in
1994, regulators gave the company a higher ceiling for profits. Finally,
Western Company of North America, an oil service company, was less than 2%
of the fund. But it went up 80% during the period as it agreed to merge
with BJ Services, another oil service firm.
Q. YOU'VE RECENTLY TAKEN OVER MANAGING THE FUND. WHAT CHANGES DO YOU
FORESEE?
A. Nothing dramatic. I'll probably trim the fund from about 100 to 60
stocks, so each one can make more of a difference. For the near term, I'll
de-emphasize gas producers and add to our stake in pipelines, which look
more attractive now given that the bond market appears to be bottoming.
Finally, I might look at Canadian companies later in the year. Their stocks
have been getting cheap and their long-term business prospects are strong.
Of course, if gas prices started rising quickly, I'd shift our focus back
to gas producers. But I don't see that happening soon.
Q. WHAT THEN DO YOU THINK ABOUT THE SECTOR'S PROSPECTS?
A. I actually think they could be positive over the long term. First,
demand has been growing steadily since 1986 as more houses convert to
natural gas; independent producers use natural gas to produce electricity;
and regulations encourage natural gas usage. Second, gas prices are
depressed, but could firm quickly if drilling started to drop off. Because
of increased efficiencies in distribution, there's a relatively tight
balance today between supply and demand compared to 10 years ago. Gas
prices can fluctuate by as much as 50% or 60%, and it wouldn't take much to
swing prices around.
FUND FACTS
START DATE: April 21, 1993
SIZE: as of February 28, 1995, more than
$79 million
MANAGER: Daniel Pickering, since February 1995;
manager, Fidelity Select Energy Services
Portfolio, since December 1995; equity
analyst, energy services and hotel industries,
since 1994; joined Fidelity in August 1994;
petroleum engineer and planning analyst,
ARCO Alaska, 1988-1992
(checkmark)
NATURAL GAS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 97.7%
TROY OUNCES
BUILDING MATERIALS - 1.6%
FABRICATED PIPE & FITTINGS - 1.6%
Coflexip sponsored ADR 50,680 $ 1,279,666 19238410
COAL - 1.2%
Eastern Enterprises Co. 36,100 952,138 27637F10
COMPUTER SERVICES & SOFTWARE - 0.8%
CAD/CAM/CAE - 0.8%
Landmark Graphics Corp. (a) 31,000 643,250 51491310
ENERGY SERVICES - 7.3%
DRILLING - 0.0%
Akita Drilling Ltd. Class A (non-vtg.) (a) 600 1,187 00990510
OIL & GAS SERVICES - 7.3%
Computalog Ltd. (a) 1,250 6,297 20490830
Enterra Corp. (a) 20,000 360,000 29380510
Global Industries Ltd. (a) 5,000 121,250 37933610
Halliburton Co. 47,375 1,764,719 40621610
Schlumberger Ltd. 35,900 2,041,813 80685710
Tuboscope Vetco International Corp. (a) 20,000 157,500 89860010
Western Co. of North America (a) 65,000 1,226,875 95804340
5,678,454
TOTAL ENERGY SERVICES 5,679,641
GAS - 30.0%
GAS & OTHER SERVICES - 1.1%
UGI Corp. 40,910 828,428 90268110
GAS DISTRIBUTION - 10.5%
Aquila Gas Pipeline Corp. 48,200 361,500 03839B10
Brooklyn Union Gas Co. (The) 20,000 490,000 11425910
Indiana Energy, Inc. 10,000 187,500 45470710
K N Energy, Inc. 24,400 524,600 48262010
MCN Corp. 30,000 551,250 55267J10
National Fuel Gas Co. 10,000 272,500 63618010
New Jersey Resources Corp. 1,000 23,125 64602510
NICOR, Inc. 20,000 495,000 65408610
Northwest Natural Gas Co. 9,000 272,250 66765510
Pacific Enterprises 130,000 3,185,000 69423210
Piedmont Natural Gas, Inc. 30,517 602,711 72018610
Public Service Co. of North Carolina, Inc. 10,000 162,500 74451610
WICOR, Inc. 10,000 290,000 92925310
Washington Gas Light Co. 20,000 762,500 93883710
8,180,436
GAS TRANSMISSION - 9.6%
Enron Corp. 93,110 3,072,630 29356110
ONEOK, Inc. 24,700 426,075 68267810
Panhandle Eastern Corp. 93,950 2,113,875 69846210
Tejas Power Corp. (a) 41,000 404,875 87907910
Trident NGL Holding, Inc. 35,900 376,950 89592610
Williams Companies, Inc. 40,000 1,150,000 96945710
7,544,405
GAS TRANSMISSION & DISTRIBUTION - 8.8%
Bay State Gas Co. 10,000 246,250 07261260
Columbia Gas System, Inc. (The) (a) 90,895 2,363,270 19764810
Consolidated Natural Gas Co. 25,000 925,000 20961510
El Paso Natural Gas Co. 17,400 535,050 28369587
Equitable Resources, Inc. 10,000 277,500 29454910
Questar Corp. 41,540 1,199,468 74835610
Seagull Energy Corp. (a) 2,100 35,438 81200710
South Jersey Industries, Inc. 5,000 100,000 83851810
Southern Union Company 10,000 165,000 84403010
Tejas Gas Corp. (Del.) (a) 19,700 847,100 87907510
Yankee Energy System, Inc. 10,000 217,500 98477910
6,911,576
TOTAL GAS 23,464,845
TROY OUNCES
OIL & GAS - 54.7%
CRUDE PETROLEUM & GAS - 41.9%
Alberta Energy Co. Ltd. 10,000 $ 136,735 01287310
Alexander Energy Corp. (a) 20,000 108,750 01461720
American Exploration Co. (a) 120,000 105,000 02576210
Anadarko Petroleum Corp. 123,075 5,399,916 03251110
Apache Corp. 72,225 1,805,625 03741110
Ballistic Energy Corp. (a) 1,000 3,778 05865K10
Barrett Resources Corp. (a) 35,000 686,875 06848020
Basin Exploration, Inc. (a) 10,000 70,000 07010710
Benton Oil & Gas Co. (a) 20,000 185,000 08328810
Berry Petroleum Co. Class A 33,700 303,300 08578910
Burlington Resources, Inc. 130,957 5,041,845 12201410
Chancellor Energy Resources (a) 5,000 6,297 15882910
Chesapeake Energy Corp. (a) 10,000 157,500 16516710
Cimarron Petroleum Ltd. (a) 2,000 13,674 17183810
Devon Energy Corp. 10,000 180,000 25179910
Enron Oil & Gas Co. 145,600 3,039,400 29356210
Flores & Rucks, Inc. (a) 100,000 962,500 34039C10
Global Natural Resources, Inc. (a) 10,000 75,000 37935510
Gulf Canada Corp. (a) 100,000 368,824 40218L30
Inverness Petroleum Ltd. (a) 39,700 207,136 46190810
Mitchell Energy & Development Corp.
Class A 20,000 330,000 60659220
Morgan Hydrocarbons, Inc. (a) 55,000 128,639 61790010
Newfield Exploration Co. (a) 44,000 858,000 65129010
Noble Affiliates, Inc. 110,950 2,829,225 65489410
Northrock Resources Ltd. (a) 5,000 28,786 66679810
Northstar Energy Corp. (a) 52,800 379,979 66703R10
Nuevo Energy Corp. (a) 10,000 180,000 67050910
Oryx Energy Co. (a) 41,900 460,900 68763F10
Pinnacle Resources Ltd. (a) 22,900 238,962 72348R10
Pogo Producing Co. 21,000 388,500 73044810
Renaissance Energy Ltd. (a) 54,500 1,088,392 75966610
St. Mary Land & Exploration Co. 2,000 27,000 79222810
Talisman Energy Inc. (a) 10,000 176,316 87425E10
Tarragon Oil & Gas Ltd. (a) 45,500 425,678 87629E20
Total SA Class B sponsored ADR 19,470 540,293 89151E10
Triton Energy Corp. (a) 45,000 1,400,625 89675010
Ulster Petroleums Ltd. (a) 10,000 30,585 90384010
Union Texas Petroleum Holdings, Inc. 110,000 2,117,500 90864010
United Meridian Corp. (a) 10,000 105,000 91086510
Vastar Resources, Inc. 70,000 1,811,250 92238010
Vintage Petroleum, Inc. 10,100 175,488 92746010
Wascana Energy, Inc. (a) 20,000 156,525 93690110
32,734,798
OIL & GAS EXPLORATION - 10.6%
Amerada Hess Corp. 56,000 2,744,000 02355110
Ampolex Ltd. Ord. 151,801 375,882 03212792
Anderson Exploration Ltd. (a) 30,000 283,365 03390110
British Petroleum PLC ADR 31,822 2,434,383 11088940
Chauvco Resources Ltd. Class A (a) 47,500 555,485 16260010
Louisiana Land & Exploration Co. 50,000 1,731,250 54626810
Petro-Canada 10,000 82,761 71644E10
Plains Petroleum Co. 3,000 67,500 72652910
8,274,626
OIL FIELD EQUIPMENT - 0.4%
Ensign Resource Service Group Ord. (a) 128,300 304,696 29357T10
PETROLEUM REFINERS - 1.8%
Coastal Corp. (The) 47,600 1,362,550 19044110
Wainoco Oil Corp. (a) 10,000 42,500 93067610
1,405,050
TOTAL OIL & GAS 42,719,170
COMMON STOCKS - CONTINUED
TROY OUNCES
SERVICES - 2.1%
SURVEYING SERVICES - 2.1%
Western Atlas, Inc. 39,800 $ 1,641,750 95767410
TOTAL COMMON STOCKS
(Cost $78,050,988) 76,380,460
REPURCHASE AGREEMENTS - 2.3%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $1,766,298 1,766,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $79,816,988) $ 78,146,460
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $148,201,325 and $123,868,734, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $165,488 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,931,000 and $1,422,400,
respectively. The weighted average interest rate paid was 5.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 88.2%
Canada 5.9
United Kingdom 3.1
France 2.3
Others (individually less than 1%) 0.5
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $80,553,226. Net unrealized depreciation aggregated
$2,406,766, of which $2,504,042 related to appreciated investment
securities and $4,910,808 related to depreciated investment securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $2,686,000 which will expire on February 28, 2003.
The fund has elected to defer to its fiscal year ending February 28, 1996
$5,601,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
NATURAL GAS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $1,766,000) (cost $79,816,988) - See $ 78,146,460
accompanying schedule
Cash 143
Receivable for investments sold 1,060,953
Receivable for fund shares sold 1,025,885
Dividends receivable 140,551
Redemption fees receivable 126
TOTAL ASSETS 80,374,118
LIABILITIES
Payable for fund shares redeemed $ 356,785
Accrued management fee 40,179
Other payables and accrued expenses 83,331
TOTAL LIABILITIES 480,295
NET ASSETS $ 79,893,823
Net Assets consist of:
Paid in capital $ 90,514,851
Undistributed net investment income 58,168
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (9,008,668
)
Net unrealized appreciation (depreciation) on investments (1,670,528
)
NET ASSETS, for 8,893,657 shares outstanding $ 79,893,823
NET ASSET VALUE and redemption price per share ($79,893,823 (divided by) 8,893,657 shares) $8.98
Maximum offering price per share (100/97.00 of $8.98) $9.26
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 1,182,551
Dividends
Interest 332,789
TOTAL INCOME 1,515,340
EXPENSES
Management fee $ 478,146
Transfer agent 698,790
Fees
Redemption fees (60,975
)
Accounting fees and expenses 77,295
Non-interested trustees' compensation 545
Custodian fees and expenses 18,607
Registration fees 66,458
Audit 26,389
Legal 958
Interest 808
Reports to shareholders 4,343
Miscellaneous 686
Total expenses before reductions 1,312,050
Expense reductions (30,065 1,281,985
)
NET INVESTMENT INCOME 233,355
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (8,500,238
)
Foreign currency transactions (305 (8,500,543
) )
Change in net unrealized appreciation (depreciation) on investment securities 3,240,598
NET GAIN (LOSS) (5,259,945
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (5,026,590
)
OTHER INFORMATION $367,823
Sales Charges Paid to FDC
Deferred sales charges withheld $3,010
by FDC
Exchange fees withheld by FSC $42,271
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED APRIL 21, 1993
FEBRUARY 28, (COMMENCEMENT
1995 OF OPERATIONS) TO
FEBRUARY 28, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 233,355 $ 66,941
Net investment income
Net realized gain (loss) (8,500,543) 390,296
Change in net unrealized appreciation (depreciation) 3,240,598 (4,911,126)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (5,026,590) (4,453,889)
Distributions to shareholders: (174,881) -
From net investment income
From net realized gain - (390,296)
In excess of net realized gain - (296,172)
TOTAL DISTRIBUTIONS (174,881) (686,468)
Share transactions 105,674,129 154,654,614
Net proceeds from sales of shares
Reinvestment of distributions 162,769 673,872
Cost of shares redeemed (83,945,454) (87,329,043)
Paid in capital portion of redemption fees 130,955 213,809
Net increase (decrease) in net assets resulting from share transactions 22,022,399 68,213,252
TOTAL INCREASE (DECREASE) IN NET ASSETS 16,820,928 63,072,895
NET ASSETS
Beginning of period 63,072,895 -
End of period (including undistributed net investment income of $58,168 and $66,827, respectively) $ 79,893,823 $ 63,072,895
OTHER INFORMATION
Shares
Sold 11,247,429 15,170,940
Issued in reinvestment of distributions 18,602 74,626
Redeemed (9,026,223) (8,591,717)
Net increase (decrease) 2,239,808 6,653,849
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
YEAR ENDED APRIL 21, 1993
FEBRUARY 28, (COMMENCEMENT
OF
OPERATIONS) TO
SELECTED PER-SHARE DATA D 1995 FEBRUARY 28, 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Net asset value, beginning of period $ 9.48 $ 10.00
Income from Investment Operations
Net investment income .03 .02
Net realized and unrealized gain (loss) (.53) (.46)
Total from investment operations (.50) (.44)
Less Distributions (.02) -
From net investment income
From net realized gain - (.07)
In excess of net realized gain - (.06)
Total distributions (.02) (.13)
Redemption fees added to paid in capital .02 .05
Net asset value, end of period $ 8.98 $ 9.48
TOTAL RETURN B, C (5.06)% (3.84)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 79,894 $ 63,073
Ratio of expenses to average net assets 1.66% 1.93% A
Ratio of expenses to average net assets before expense reductions 1.70% 1.94% A
Ratio of net investment income to average net assets .30% .17% A
Portfolio turnover rate 177% 44% A
</TABLE>
a ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD.
PRECIOUS METALS AND MINERALS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
PRECIOUS METALS AND
MINERALS -6.86% 14.65% 92.30%
PRECIOUS METALS AND MINERALS
(INCL. 3% SALES CHARGE) -9.65% 11.21% 86.54%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
PRECIOUS METALS AND MINERALS -6.86% 2.77% 6.76%
PRECIOUS METALS AND MINERALS
(INCL. 3% SALES CHARGE) -9.65% 2.15% 6.43%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have a
history of growth in the long run. And, as with all
stock funds, the share price and return of a
fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to experience
rapid growth you may have the potential for
above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Precious MetaStandard & Poor's 50
02/28/85 9700.00 10000.00
03/31/85 11715.32 10007.00
04/30/85 11369.25 9997.99
05/31/85 11226.75 10575.88
06/30/85 10833.88 10741.92
07/31/85 9968.02 10725.81
08/31/85 9746.27 10634.64
09/30/85 9418.93 10301.77
10/31/85 8574.18 10777.71
11/30/85 9566.76 11517.07
12/31/85 8964.88 12074.49
01/31/86 10865.56 12142.11
02/28/86 11002.83 13050.34
03/31/86 10327.03 13778.55
04/30/86 9788.51 13622.85
05/31/86 8795.93 14347.59
06/30/86 8975.44 14590.06
07/31/86 8858.56 13774.48
08/31/86 10546.92 14796.54
09/30/86 11925.40 13572.87
10/31/86 10878.19 14356.02
11/30/86 12000.20 14704.87
12/31/86 11914.71 14329.90
01/31/87 13346.61 16260.14
02/28/87 14286.97 16902.41
03/31/87 18368.96 17390.89
04/30/87 19640.57 17236.11
05/31/87 17888.10 17386.07
06/30/87 17631.64 18264.06
07/31/87 21222.08 19190.05
08/31/87 20666.41 19905.84
09/30/87 21307.56 19469.90
10/31/87 15430.35 15276.09
11/30/87 17375.18 14017.34
12/31/87 16383.71 15084.06
01/31/88 13505.19 15719.09
02/29/88 13526.84 16451.60
03/31/88 14652.27 15943.25
04/30/88 14165.30 16120.22
05/31/88 14241.05 16260.46
06/30/88 13721.62 17006.82
07/31/88 13808.20 16942.19
08/31/88 12985.76 16366.16
09/30/88 12109.22 17063.36
10/31/88 12552.91 17537.72
11/30/88 13018.23 17286.93
12/31/88 12474.57 17589.45
01/31/89 12993.41 18877.00
02/28/89 13410.73 18406.96
03/31/89 13410.73 18835.84
04/30/89 12801.67 19813.42
05/31/89 12192.60 20615.87
06/30/89 13151.31 20498.36
07/31/89 13512.24 22349.36
08/31/89 13782.94 22787.41
09/30/89 14267.94 22693.98
10/31/89 14256.66 22167.48
11/30/89 16072.58 22619.69
12/31/89 16486.71 23162.57
01/31/90 17799.71 21608.36
02/28/90 16269.78 21887.11
03/31/90 15561.90 22467.12
04/30/90 13963.47 21905.44
05/31/90 14762.69 24041.22
06/30/90 13689.45 23877.74
07/31/90 14522.92 23801.33
08/31/90 14671.35 21649.69
09/30/90 14340.24 20595.35
10/31/90 12730.39 20506.79
11/30/90 12502.04 21831.53
12/31/90 13012.38 22440.63
01/31/91 11600.00 23419.04
02/28/91 12641.92 25093.50
03/31/91 12398.81 25700.76
04/30/91 12364.08 25762.44
05/31/91 13058.69 26875.38
06/30/91 13915.37 25644.49
07/31/91 13915.37 26839.52
08/31/91 12456.69 27475.62
09/30/91 12711.38 27016.78
10/31/91 13568.07 27378.80
11/30/91 13996.41 26275.44
12/31/91 13212.44 29281.34
01/31/92 13492.81 28736.71
02/29/92 12791.89 29110.29
03/31/92 12289.56 28542.64
04/30/92 11565.27 29381.79
05/31/92 12324.60 29525.76
06/30/92 12394.13 29085.83
07/31/92 12557.98 30275.44
08/31/92 11996.21 29654.79
09/30/92 11504.66 30004.72
10/31/92 10767.33 30109.74
11/30/92 10135.33 31136.48
12/31/92 10323.40 31519.46
01/31/93 10573.45 31784.22
02/28/93 11740.34 32216.49
03/31/93 13335.88 32896.25
04/30/93 15491.06 32100.16
05/31/93 17539.07 32960.45
06/30/93 17824.84 33056.03
07/31/93 20146.71 32923.81
08/31/93 18122.51 34171.62
09/30/93 16693.67 33908.50
10/31/93 19063.17 34610.41
11/30/93 19027.45 34281.61
12/31/93 21846.81 34696.42
01/31/94 20943.06 35876.09
02/28/94 20027.25 34903.85
03/31/94 19822.40 33382.04
04/30/94 19823.19 33809.33
05/31/94 19859.36 34363.81
06/30/94 20257.27 33521.89
07/31/94 21028.98 34621.41
08/31/94 22524.16 36040.89
09/30/94 24248.44 35157.89
10/31/94 23307.92 35948.94
11/30/94 20811.94 34639.68
12/31/94 21597.53 35153.39
01/31/95 17835.07 36064.91
02/28/95 18653.53 37470.36
Let's say you invested $10,000 in Fidelity Select Precious Metals and
Minerals Portfolio ten years ago on February 28, 1985 and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $18,654 -
an 86.54% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $37,470 over the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Barrick Gold Corp. 12.5
Anglo American Corp. of South Africa Ltd. ADR 4.8
Free State Consolidated Gold Mines Ltd. ADR 4.0
Western Deep Levels Ltd. ADR 3.8
Kloof Gold Mining Co. Ltd. sponsored ADR 3.7
Vaal Reefs Exploration & Mining Co. Ltd. ADR 3.6
Newmont Mining Corp. 3.6
De Beers Consolidated Mines Ltd. ADR 3.0
Western Areas Gold Mining Ltd. Ord. 2.9
Gold Fields South Africa Ltd. sponsored ADR 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 27.9
Row: 1, Col: 2, Value: 5.0
Row: 1, Col: 3, Value: 7.9
Row: 1, Col: 4, Value: 26.7
Row: 1, Col: 5, Value: 32.5
Gold Ores
(South Africa) 32.5%
Gold Ores (Canada) 26.7%
Gold Ores (U.S.) 7.9%
Gold Ores (Australia) 5.0%
All Others 27.9%*
* INCLUDES SHORT-TERM INVESTMENTS
PRECIOUS METALS AND MINERALS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Malcolm MacNaught, Portfolio Manager of Fidelity Select Precious
Metals and Minerals
Portfolio
Q. HOW HAS THE FUND PERFORMED, MALCOLM?
A. The fund's return of -6.86% for the year ended February 28, 1995, is
disappointing when compared to the S&P 500's return of 7.36% for the same
period. But investors should remember this is a highly specialized sector
of the market.
Q. WHY HAS THE FUND'S PERFORMANCE BEEN DOWN?
A. One reason is because the worldwide price for gold and silver bullion
has been down, and the price of metal directly impacts the share price of
the fund. Investors should remember that gold stocks can be much more
volatile than the underlying bullion both on the upside and the downside.
For example, during the past 12 months, gold was down 2.47%, and companies
have been hurt by labor problems. In addition, the fund had a significant
investment in South Africa. Although the world had expected South African
gold production to decline in 1994, which would have boosted gold prices,
instead it was flat. Finally, North American gold stocks ran up to very
high price levels in 1993 and the market needed to correct.
Q. WHY IS THE FUND STILL SO HEAVILY WEIGHTED TOWARDS SOUTH AFRICA?
A. The fund had about 35% of its assets in South African gold stocks
because the country remains the largest producer of gold. The gold market
in South Africa has been turbulent in the past but things have begun to
turn around. From a political standpoint, labor unrest could lessen in the
next six months now that the African National Congress (ANC) has taken an
active role and understands the importance of labor and management working
together. With fewer labor problems, they should be more attractive
investments and foreign investors should begin to return to the stocks.
Q. WHAT ABOUT THE SITUATION IN THE REST OF THE WORLD?
A. Australian gold production also increased unexpectedly in 1994 and South
American production was up. World production for last year was a little
higher than what was expected, thereby driving down gold prices. Offsetting
this is strong jewelry demand worldwide. This is very important since the
jewelry trade consumes more than 80% of the gold produced each year.
Q. WHAT'S YOUR STRATEGY IN SUCH AN UNFAVORABLE ENVIRONMENT?
A. The fund has been in a holding pattern for the past six months. The only
strategy that made sense was to invest in the best companies with growing
reserves, growing production and growing earnings. From my perspective,
when the market for gold turns around, the fund will be well positioned in
quality companies, and these are the ones that I hope will perform the best
over time.
Q. WHAT ARE SOME EXAMPLES OF SUCH COMPANIES?
A. Well, you'll notice that the fund's top 10 holdings haven't changed much
in the past six months. Barrick Gold Corp., the fund's largest holding,
acquired Lac Minerals, making it an even more attractive investment than it
was before. As I've stated before, I think Barrick Gold Corp. can double
its production over the next few years. Though the stock has moved up and
down a bit, I think tremendous opportunities still exist for the company to
find undiscovered ore bodies. Other holdings such as Anglo American Corp.
and Kloof Gold Mining are good holdings for the fund. Newmont Mining Corp.
has some very exciting new projects in South America, Russia and possibly
the Pacific Basin. Finally, DeBeers is beginning to look attractive again.
Q. DO YOU REGRET SOME OF YOUR INVESTMENT DECISIONS OVER THE PAST SIX
MONTHS?
A. Sure. I could have had more of the fund in stable cash instruments such
as short-term Treasury bills instead of being so heavily invested in gold
shares. However, investors choose precious metals funds to track activities
in the precious metals market and should expect the fund's performance to
reflect conditions in that market.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. With world production remaining high and the improbability of gold
breaking much above $400 per ounce, the next few months could be
frustrating. However, much depends on perceived inflation and foreign
buying of gold, which is trading at very low prices in some currencies. I
think geographic concentration will be important, especially if the
situation in South Africa continues to improve. For 1996, we earlier had
expected a significant incremental increase in supply from Venezuela based
on the number of projects under way. It now appears that many of them may
be postponed indefinitely. Thus, Chile, Peru and Nevada may be the only
geographic areas where there will be incremental growth. The two major
corporate benefactors should be Barrick Gold and Newmont Mining, the fund's
two largest North American holdings. Shareholders should understand that
gold and precious metals are very volatile and anything can happen.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1995, more than
$364 million
MANAGER: Malcolm MacNaught, since 1981;
manager, American Gold Portfolio, since
December 1985; Fidelity Advisor Global
Resources Fund, since 1988; joined Fidelity
in 1968
(checkmark)
PRECIOUS METALS AND MINERALS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 94.1%
TROY OUNCES
AUSTRALIA - 9.7%
METALS & MINING - 1.4%
METAL MINING - 0.3%
Samantha Gold NL 500,000 $ 942,412 93599C22
METAL MINING SERVICES - 1.1%
Acacia Resources Ltd. (a) 2,250,000 4,124,453 00399822
TOTAL METALS & MINING 5,066,865
PRECIOUS METALS - 8.3%
GOLD & SILVER ORES - 3.3%
North Flindes 610,000 3,381,614 65940091
Plutonic Resources Ltd. 1,297,600 5,035,389 72999192
Zapopan NL (a) 3,000,000 3,592,260 98999293
12,009,263
GOLD ORES - 5.0%
Aurora Gold Ltd. (a) 500,000 524,795 05199722
Delta Gold (a) 440,000 904,130 24763810
Poseidon Gold Ltd. 4,300,000 6,992,359 36899192
Gold Mines Kalgoorlie 4,750,000 3,300,300 38065310
Great Central Mines N.L. ADR (a) 125,000 671,875 39029010
Great Central Mines NL (a) 2,116,500 3,973,602 39029092
St. Barbara Mines Ltd. 2,400,000 2,057,784 79999H22
18,424,845
TOTAL PRECIOUS METALS 30,434,108
TOTAL AUSTRALIA 35,500,973
CANADA - 27.0%
HOLDING COMPANIES - 0.2%
HOLDING COMPANY OFFICES - 0.2%
Bolivar Goldfields Ltd. (a) 807,200 848,125 09760Q10
METALS & MINING - 0.1%
METAL ORES - 0.1%
International Musto Explorations Ltd. (a) 50,200 329,657 45993110
PRECIOUS METALS - 26.7%
GOLD ORES - 26.7%
Agnico Eagle Mines Ltd. 851,100 8,268,760 00847410
Barrick Gold Corp. 2,090,000 45,498,548 06790110
Cambior Inc. 421,000 4,393,148 13201L10
Euro-Nevada Mining Corp. 310,000 6,051,420 29870P10
Franco Nevada Mining Corp. 150,000 6,827,750 35186010
Golden Star Resources, Ltd. Canada (a) 267,600 1,829,514 38119T10
Hemlo Gold Mines Inc. 331,400 2,861,934 42366F10
Kinross Gold Corp. (a) 1,250,000 5,397,425 49690210
Orvana Minerals Corp. (a) 967,200 2,262,174 68759M10
Pegasus Gold, Inc. (a) 100,000 1,070,490 70556K10
Placer Dome, Inc. 400,000 8,204,096 72590610
Prime Resources Group, Inc. (a) 866,956 4,835,317 74157L10
TOTAL PRECIOUS METALS 97,500,576
TOTAL CANADA 98,678,358
GHANA - 2.3%
PRECIOUS METALS - 2.3%
GOLD ORES - 2.3%
Ashanti Goldfields Ltd. GDR 399,200 8,303,360 04374320
TROY OUNCES
SOUTH AFRICA - 44.6%
CREDIT & OTHER FINANCE - 0.8%
FINANCIAL SERVICES - 0.8%
Genbel Investments Ltd. Ord. 1,400,000 $ 3,000,004 36867310
HOLDING COMPANIES - 1.2%
HOLDING COMPANY OFFICES - 1.2%
Beatrix Mines Ltd. ADR 401,300 2,387,735 07419020
Gencor Ltd. (Reg.) 578,500 1,844,709 36868193
Johannesburg Consolidated Investment
Co. Ltd. 10,000 244,898 47779010
4,477,342
METALS & MINING - 7.7%
MISCELLANEOUS NONMETAL MINERALS - 3.0%
De Beers Consolidated Mines Ltd. ADR 521,300 10,816,975 24025330
MISCELLANEOUS METAL ORES - 4.7%
Impala Platinum Holdings Ltd.:
ADR (a) 300,000 6,150,000 45255320
Ord. 114,700 2,370,077 45255310
Rustenberg Platinum Holding Ltd. ADR 380,000 8,550,000 78307820
17,070,077
TOTAL METALS & MINING 27,887,052
PRECIOUS METALS - 34.9%
GOLD & SILVER ORES - 2.4%
Eastvaal Gold Holdings Ltd. (a) 1,171,400 2,211,322 27799322
Southvaal Holdings Ltd. ADR 258,000 6,385,500 84473820
8,596,822
GOLD ORES - 32.5%
Anglo American Corp. of South
Africa Ltd. ADR 350,000 17,675,000 03486130
Driefontein Consolidated Ltd.
sponsored ADR 685,000 8,990,625 26202650
Free State Consolidated Gold Mines
Ltd. ADR 1,270,000 14,763,750 35614220
Gold Fields South Africa Ltd.
sponsored ADR 380,200 9,029,750 38059750
Harmony Gold Mining Co. Ltd. ADR (a) 170,000 1,423,750 41321620
Hartebeestfontein Gold Mining Co.,
Ltd. ADR 1,203,800 4,694,820 41619840
Kloof Gold Mining Co. Ltd.
sponsored ADR 1,150,000 13,656,250 49874660
Middle Witwatersrand West Area 300,000 746,172 59603410
Randfontein Estates Gold Mining Co.
Ltd. ADR 890,700 6,234,900 75233640
Vaal Reefs Exploration & Mining Co.
Ltd. ADR 1,929,600 13,266,000 91850640
Western Areas Gold Mining Ltd. Ord. 969,200 10,507,911 95765410
Western Deep Levels Ltd. Ord. 42,000 1,350,000 95807710
Western Deep Levels Ltd. ADR 431,300 14,017,250 95807720
Winkelhaak Mines Ltd. ADR 255,700 2,365,225 97420420
118,721,403
TOTAL PRECIOUS METALS 127,318,225
TOTAL SOUTH AFRICA 162,682,623
UNITED KINGDOM - 0.1%
Signet Group PLC (a) 737,500 204,243 82999F22
COMMON STOCKS - CONTINUED
TROY OUNCES
USA - 10.4%
METALS & MINING - 0.9%
MISCELLANEOUS METAL ORES - 0.9%
Still Watermining Co. (a) 200,000 $ 3,175,000 86074Q10
PRECIOUS METALS - 7.9%
GOLD ORES - 7.9%
Amax Gold, Inc. (a) 353,000 1,809,125 02312010
Battle Mountain Gold Co. 300,000 2,850,000 07159310
Hecla Mining Co. (a) 280,000 2,625,000 42270410
Homestake Mining Co. 545,000 8,447,500 43761410
Newmont Mining Corp. 360,000 13,005,000 65163910
Santa Fe Pacific Gold Corp. 2,000 21,750 80217610
28,758,375
SECURITIES INDUSTRY - 1.6%
INVESTMENT MANAGERS - 1.6%
Pioneer Group, Inc. 300,000 5,850,000 72368410
TOTAL USA 37,783,375
TOTAL COMMON STOCKS
(Cost $348,378,591) 343,152,932
CONVERTIBLE PREFERRED STOCKS - 0.7%
PRECIOUS METALS - 0.7%
GOLD ORES - 0.7%
Newmont Mining Corp. depository
shares representing 1/2 $1.375 (b)
(Cost $3,015,897) 46,000 2,403,500 65163930
BULLION - 0.0%
TROY OUNCES
Gold Bullion (a) 240 90,361 68999410
Silver Bullion (5,000 oz Bar) (a) 5,999 27,178 83799692
TOTAL BULLION
(Cost $122,134) 117,539
REPURCHASE AGREEMENTS - 5.2%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 6.08%
dated 2/28/95 due 3/1/95 $ 19,096,225 19,093,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $370,609,622) $364,766,971
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $2,403,500 or 0.7% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $201,210,970 and $169,325,019, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $40,501 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $6,588,000 and $3,144,565,
respectively. The weighted average interest rate paid was 4.9% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
South Africa 44.8%
Canada 27.1
United States 16.0
Australia 9.7
Ghana 2.3
Others (individually less than 1%) 0.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $371,643,510. Net unrealized depreciation
aggregated $6,876,539, of which $48,249,666 related to appreciated
investment securities and $55,126,205 related to depreciated investment
securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $45,248,000 of which $17,296,000, $6,357,000, $2,070,000,
$8,843,000 and $10,682,000 will expire on February 28, 1997, 1998, 1999,
2000 and 2001, respectively.
PRECIOUS METALS AND MINERALS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $19,093,000) (cost $370,609,622) - See $ 364,766,971
accompanying schedule
Cash 80
Receivable for investments sold 1,025,406
Receivable for fund shares sold 5,608,877
Dividends receivable 1,320,506
Redemption fees receivable 2,682
Other receivables 33,422
TOTAL ASSETS 372,757,944
LIABILITIES
Payable for investments purchased $ 1,710,936
Payable for fund shares redeemed 6,313,278
Accrued management fee 186,668
Other payables and accrued expenses 343,115
TOTAL LIABILITIES 8,553,997
NET ASSETS $ 364,203,947
Net Assets consist of:
Paid in capital $ 417,207,218
Distributions in excess of net investment income (912,704
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (46,247,898
)
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies (5,842,669
)
NET ASSETS, for 23,855,474 shares outstanding $ 364,203,947
NET ASSET VALUE and redemption price per share ($364,203,947 (divided by) 23,855,474 shares) $15.27
Maximum offering price per share (100/97.00 of $15.27) $15.74
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 8,890,966
Dividends
Interest (including security lending 1,808,019
fees of $81)
TOTAL INCOME 10,698,985
EXPENSES
Management fee $ 2,704,371
Transfer agent 3,271,506
Fees
Redemption fees (354,030
)
Accounting and security lending fees 431,938
Non-interested trustees' compensation 6,123
Custodian fees and expenses 125,699
Registration fees 106,697
Audit 52,456
Legal 7,168
Interest 9,874
Reports to shareholders 19,652
Miscellaneous 3,918
Total expenses before reductions 6,385,372
Expense reductions (1,739 6,383,633
)
NET INVESTMENT INCOME 4,315,352
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized loss of $760,009 on sale of investments in precious metals)25,230,795
Foreign currency transactions 36,384 25,267,179
Change in net unrealized appreciation (depreciation) on:
Investment securities (77,536,130
)
Assets and liabilities in (18 (77,536,148
foreign currencies ) )
NET GAIN (LOSS) (52,268,969
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (47,953,617
)
OTHER INFORMATION $2,403,153
Sales Charges Paid to FDC
Deferred sales charges withheld $55,156
by FDC
Exchange fees withheld by FSC $258,263
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 4,315,352 $ 5,207,951
Net investment income
Net realized gain (loss) 25,267,179 18,030,231
Change in net unrealized appreciation (depreciation) (77,536,148) 112,846,238
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (47,953,617) 136,084,420
Distributions to shareholders: (4,315,352) (5,127,603)
From net investment income
In excess of net investment income (1,235,277) (551,255)
TOTAL DISTRIBUTIONS (5,550,629) (5,678,858)
Share transactions 934,524,938 1,777,546,533
Net proceeds from sales of shares
Reinvestment of distributions 5,435,430 5,586,071
Cost of shares redeemed (934,775,405) (1,649,222,991)
Paid in capital portion of redemption fees 3,310,757 6,974,855
Net increase (decrease) in net assets resulting from share transactions 8,495,720 140,884,468
TOTAL INCREASE (DECREASE) IN NET ASSETS (45,008,526) 271,290,030
NET ASSETS
Beginning of period 409,212,473 137,922,443
End of period (including distributions in excess of net investment income of $(912,704) and $ 364,203,947 $ 409,212,473
$(449,228), respectively)
OTHER INFORMATION
Shares
Sold 53,173,413 119,380,060
Issued in reinvestment of distributions 324,762 319,586
Redeemed (54,266,578) (109,070,745)
Net increase (decrease) (768,403) 10,628,901
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.62 $ 9.86 $ 9.90 $ 10.68 $ 12.23
Income from Investment Operations
Net investment income .17 .21 .09 .10 .18
Net realized and unrealized gain (loss) (1.42) 6.48 (.05) (.91) (1.71)
Total from investment operations (1.25) 6.69 .04 (.81) (1.53)
Less Distributions (.18) (.19) (.17) (.10) (.15)
From net investment income
In excess of net investment income (.05) (.02) - - -
Total distributions (.23) (.21) (.17) (.10) (.15)
Redemption fees added to paid in capital .13 .28 .09 .13 .13
Net asset value, end of period $ 15.27 $ 16.62 $ 9.86 $ 9.90 $ 10.68
TOTAL RETURN B, C (6.86)% 70.58% 1.51% (6.46)% (11.45)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 364,204 $ 409,212 $ 137,922 $ 130,002 $ 155,367
Ratio of expenses to average net assets 1.46% 1.55% 1.73% A 1.81% 1.79%
Ratio of expenses to average net assets before expense reductions 1.46% 1.55% 1.73% A 1.81% 1.79%
Ratio of net investment income to average net assets .99% 1.38% 1.12% A .92% 1.52%
Portfolio turnover rate 43% 73% 36% A 44% 41%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURN WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIOD SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
UTILITIES GROWTH PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
UTILITIES GROWTH 0.21% 55.84% 244.63%
UTILITIES GROWTH
(INCL. 3% SALES CHARGE) -2.79% 51.16% 234.29%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
UTILITIES GROWTH 0.21% 9.28% 13.17%
UTILITIES GROWTH
(INCL. 3% SALES CHARGE) -2.79% 8.61% 12.83%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Utilities (06Standard & Poor's 50
02/28/85 9700.00 10000.00
03/31/85 10248.84 10007.00
04/30/85 10471.65 9997.99
05/31/85 11053.10 10575.88
06/30/85 11347.58 10741.92
07/31/85 10696.76 10725.81
08/31/85 11002.70 10634.64
09/30/85 10507.64 10301.77
10/31/85 11230.77 10777.71
11/30/85 11698.02 11517.07
12/31/85 12404.46 12074.49
01/31/86 12749.34 12142.11
02/28/86 13650.47 13050.34
03/31/86 14106.60 13778.55
04/30/86 13828.47 13622.85
05/31/86 14401.42 14347.59
06/30/86 15235.80 14590.06
07/31/86 15916.30 13774.48
08/31/86 16969.88 14796.54
09/30/86 15093.73 13572.87
10/31/86 15797.99 14356.02
11/30/86 15938.84 14704.87
12/31/86 15386.70 14329.90
01/31/87 16631.83 16260.14
02/28/87 16045.89 16902.41
03/31/87 15724.75 17390.89
04/30/87 14823.29 17236.11
05/31/87 14586.66 17386.07
06/30/87 15105.00 18264.06
07/31/87 14896.53 19190.05
08/31/87 15364.16 19905.84
09/30/87 15240.21 19469.90
10/31/87 14321.86 15276.09
11/30/87 13842.96 14017.34
12/31/87 13962.53 15084.06
01/31/88 15169.16 15719.09
02/29/88 15050.28 16451.60
03/31/88 14622.31 15943.25
04/30/88 14663.92 16120.22
05/31/88 15121.61 16260.46
06/30/88 15519.86 17006.82
07/31/88 15470.60 16942.19
08/31/88 15446.14 16366.16
09/30/88 15984.24 17063.36
10/31/88 16320.56 17537.72
11/30/88 16289.99 17286.93
12/31/88 16260.23 17589.45
01/31/89 17026.15 18877.00
02/28/89 16919.43 18406.96
03/31/89 17208.22 18835.84
04/30/89 18093.43 19813.42
05/31/89 18953.52 20615.87
06/30/89 19432.25 20498.36
07/31/89 20496.42 22349.36
08/31/89 20586.71 22787.41
09/30/89 20883.38 22693.98
10/31/89 20786.64 22167.48
11/30/89 21470.29 22619.69
12/31/89 22605.39 23162.57
01/31/90 21489.63 21608.36
02/28/90 21450.94 21887.11
03/31/90 21334.85 22467.12
04/30/90 20444.82 21905.44
05/31/90 21508.98 24041.22
06/30/90 21763.87 23877.74
07/31/90 21942.54 23801.33
08/31/90 20738.21 21649.69
09/30/90 20791.15 20595.35
10/31/90 21856.51 20506.79
11/30/90 22432.21 21831.53
12/31/90 22730.74 22440.63
01/31/91 22630.51 23419.04
02/28/91 23606.02 25093.50
03/31/91 23873.29 25700.76
04/30/91 23766.38 25762.44
05/31/91 23773.06 26875.38
06/30/91 23484.68 25644.49
07/31/91 24248.97 26839.52
08/31/91 24804.82 27475.62
09/30/91 25569.12 27016.78
10/31/91 25923.47 27378.80
11/30/91 26222.24 26275.44
12/31/91 27510.54 29281.34
01/31/92 26663.72 28736.71
02/29/92 26468.31 29110.29
03/31/92 26193.27 28542.64
04/30/92 26909.81 29381.79
05/31/92 27430.92 29525.76
06/30/92 27748.23 29085.83
07/31/92 29223.64 30275.44
08/31/92 29208.66 29654.79
09/30/92 29365.94 30004.72
10/31/92 29358.45 30109.74
11/30/92 29560.66 31136.48
12/31/92 30424.52 31519.46
01/31/93 30942.05 31784.22
02/28/93 32533.84 32216.49
03/31/93 33412.08 32896.25
04/30/93 33229.47 32100.16
05/31/93 33300.74 32960.45
06/30/93 34575.75 33056.03
07/31/93 34971.72 32923.81
08/31/93 36492.23 34171.62
09/30/93 36492.23 33908.50
10/31/93 36120.02 34610.41
11/30/93 34354.01 34281.61
12/31/93 34241.17 34696.42
01/31/94 34942.76 35876.09
02/28/94 33357.35 34903.85
03/31/94 32154.62 33382.04
04/30/94 33079.58 33809.33
05/31/94 32419.11 34363.81
06/30/94 32316.78 33521.89
07/31/94 33247.03 34621.41
08/31/94 33116.79 36040.89
09/30/94 32270.27 35157.89
10/31/94 32679.58 35948.94
11/30/94 31498.16 34639.68
12/31/94 31703.67 35153.39
01/31/95 32997.51 36064.91
02/28/95 33428.78 37470.36
Let's say you invested $10,000 in Fidelity Select Utilities Growth
Portfolio on February 28, 1985 and paid a 3% sales charge. By February 28,
1995, your investment would have grown to $33,429 - a 234.29% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$37,470 over the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Ameritech Corp. 7.0
SBC Communications, Inc. 6.6
BellSouth Corp. 6.3
NYNEX Corp 5.9
U.S. West, Inc. 5.9
Bell Atlantic Corp. 4.7
GTE Corp. 3.8
Pacific Telesis Group 3.4
Enron Corp. 2.9
Williams Companies, Inc. 2.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 22.5
Row: 1, Col: 2, Value: 6.8
Row: 1, Col: 3, Value: 6.9
Row: 1, Col: 4, Value: 8.1
Row: 1, Col: 5, Value: 10.2
Row: 1, Col: 6, Value: 45.5
Telephone Services 45.5%
Electric Power 10.2%
Gas Transmission 8.1%
Gas Distribution 6.9%
Electric & Other
Services 7.4%
All Others 21.9%*
* INCLUDES SHORT-TERM INVESTMENTS
UTILITIES GROWTH PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Muresianu,
Portfolio Manager of
Fidelity Select Utilities
Growth Portfolio
Q. JOHN, HOW DID THE FUND PERFORM?
A. For the 12 months ended February 28, 1995, the fund had a total return
of 0.21%, lagging the S&P 500, which returned 7.36% during the same period.
Q. WHAT HAS THE INVESTING ENVIRONMENT BEEN LIKE FOR UTILITY STOCKS?
A. After sharply declining much of the year, utilities had a strong rally
from October 1994 through January 1995. In February, there was a natural
pullback in telephone and electric stocks, after an extremely strong rise,
while gas utilities performed better. The performance of utility stocks
has, for the most part, been a reflection of the market's reaction to the
interest rate environment. As interest rates were rising through much of
the year, investors turned away from interest-rate-sensitive utility
stocks. However, more recently the general feeling has been that the
economy is slowing down, making interest rate increases seem less likely
and utility stocks more attractive.
Q. HOW HAVE THE FUND'S TELEPHONE HOLDINGS FARED?
A. The telephone group did better than the others in the first half of the
year. I've focused on these stocks, which helped performance at that time.
I believe - from a long-term perspective - that telephone utilities can be
a much better investment than electric and gas utilities, because of volume
growth potential, particularly on the cellular side. Two big relative
winners for the fund over the period were Ameritech and SBC Communications.
Both companies presently are enjoying about a 40% to 50% cellular
subscriber growth rate and are controlling costs. However, in the second
half of calendar 1994, telephones fared poorly and electric utilities did
well. In January 1995, both telephone and electric utility stocks surged -
with telephone utilities once again outperforming electrics - but both
declined in February.
Q. WHAT WAS BEHIND THE SURGE IN ELECTRICAL STOCKS?
A. The group had declined so much that it attracted "bottom-fishers" -
those who buy stocks after significant declines. The second factor was the
perception that interest rates had peaked. A third factor was that in the
second half of 1994, many portfolio strategists turned negative on the
broad market, and recommended electric utilities as a "safe haven."
Finally, many institutional investors - such as mutual funds, insurance
companies, banks and pension funds - had shifted away from electric
utilities. This added some fuel to the rally.
Q. LET'S TURN TO GAS STOCKS . . .
A. When you talk about gas companies, it's important to distinguish between
local distribution companies - such as Brooklyn Union Gas and People's
Energy in Chicago - and pipeline companies. By and large, the distribution
companies are regulated. The biggest factor impacting earnings for these
companies is the direction of interest rates. The higher rates go, the
higher the earnings allowed by regulators. The paradox here, however, is
that higher rates are good for company earnings, but generally bad for
their stock prices.
Q. WHAT ABOUT PIPELINE COMPANIES?
A. Most stocks in this group are really diversified energy conglomerates.
For example, Enron is a pipeline company, but its earnings will be driven
for the most part by international power projects, oil and gas production,
and electricity marketing. This group had been the most disappointing in
the six months ended January 31, largely because of sharply
weaker-than-expected gas prices. However, it - along with the gas
distribution group - had a nice bounce in February, because of the
perception that gas prices were bottoming out. The fund's holdings in
ENSERCH, Coastal and Sonat were among the specific stocks in the pipeline
group that suffered, then recovered.
Q. WHY HAS THE FUND'S CASH AND SHORT-TERM INVESTMENTS POSITION - 10.2% AT
THE END OF THE PERIOD - STAYED RELATIVELY HIGH?
A. I'm still concerned about the broad market. Valuations - stock prices
relative to earnings - are at historical highs, and interest rates have
risen sharply over the past 12 months. The combination of high valuations
and sharply higher rates traditionally has been a dangerous combination,
making the stock market a lot riskier today than it has been for a while.
FUND FACTS
START DATE: December 10, 1981
SIZE: as of February 28, 1995, more than
$237 million
MANAGER: John Muresianu, since 1992;
manager, Fidelity Utilities Fund, since 1993;
Fidelity Select Natural Gas Portfolio, 1993 to
1994; U.S. Pension Accounts and Canadian
Mutual Funds, 1990-1992; analyst, natural
gas, life insurance, 1989-1992; joined Fidelity
in 1986
(checkmark)
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Stock performance in the utility sector probably will be driven largely
by moves in interest rates. If rates continue to rise, stocks in the sector
may continue to struggle. In that case, I'll continue to favor telephone
stocks, because they have the best long-term outlook for earnings growth.
UTILITIES GROWTH PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.8%
TROY OUNCES
CELLULAR - 1.9%
CELLULAR & COMMUNICATION SERVICES - 1.9%
Airtouch Communications (a) 163,600 $ 4,458,100 00949T10
COMPUTERS & OFFICE EQUIPMENT - 0.0%
ELECTRONIC COMPUTERS - 0.0%
Itron, Inc. (a) 1,100 27,213 46574110
ELECTRIC UTILITY - 17.0%
ELECTRIC & OTHER SERVICES - 6.8%
CIPSCO, Inc. 4,500 132,750 12553910
Hidro Cantabrico 33,050 879,785 42899999
IES Industries, Inc. 21,900 599,513 44949M10
Illinova Corp. 113,100 2,643,713 45231710
LG&E Energy Corp. 9,900 384,863 50191710
Long Island Lighting Co. 18,000 288,000 54267110
Montana Power Co. 73,300 1,740,875 61208510
NIPSCO Industries, Inc. 117,100 3,703,288 62914010
New York State Electric & Gas Corp. 300 6,450 64984010
Niagara Mohawk Power Corp. 127,300 1,893,588 65352210
Peco Energy Co. 52,600 1,407,050 69330410
Public Service Co. of Colorado 307 9,402 74444810
Public Service Co. of New Mexico (a) 125,500 1,615,813 74449910
Rochester Gas & Electric Corp. 21,200 463,750 77136710
Sierra Pacific Resources 12,400 251,100 82642510
Utilicorp United, Inc. 8,105 234,032 91800510
16,253,972
ELECTRIC POWER - 10.2%
AES Corp. 252,249 4,666,607 00130H10
Boston Edison Co. 46,700 1,144,150 10059910
Centerior Energy Corp. 38,700 377,325 15188310
Central & South West Corp. 9,200 226,550 15235710
Central Louisiana Electric Co., Inc. 66,106 1,553,491 15389760
CESC Ltd. GDR (a)(b) 45,000 242,100 15712810
CESC Ltd. GDR (warrants) (a)(b) 18,000 180 15712811
DQE, Inc. 70,300 2,363,838 23329J10
Detroit Edison Company 14,500 415,063 25084710
Eastern Utilities Associates 118,244 2,793,515 27717310
El Paso Electric Co. (a) 76,900 124,963 28367710
Empresa Nacional De Electricidad SA
sponsored ADR 24,300 1,060,088 29244720
General Public Utilities Corp. 14,600 441,650 37055010
Great Bay Power (a) 12,090 108,810 39013910
Hawaiian Electric Industries, Inc. 4,200 138,600 41987010
IPALCO Enterprises, Inc. 800 26,300 46261310
Kansas City Power & Light Co. 1,300 31,038 48513410
Maine Public Service Co. 44,200 1,038,700 56048310
New England Electric Systems 17,800 587,400 64400110
Northeast Utilities 23,000 523,250 66439710
Nova Scotia Power, Inc. 49,700 402,379 66981610
Ohio Edison Co. 26,500 556,500 67734710
Pinnacle West Capital Corp. 150,200 3,229,300 72348410
Portland General Corp. 47,100 959,663 73650610
Sithe Energies, Inc. (a) 27,200 258,400 82990410
TECO Energy, Inc. 16,900 363,350 87237510
United Illuminating Co. 22,500 748,125 91063710
24,381,335
TOTAL ELECTRIC UTILITY 40,635,307
GAS - 22.3%
GAS & OTHER SERVICES - 1.4%
MDU Resources Group, Inc. 66,600 1,789,875 55269010
UGI Corp. 56,188 1,137,807 90268110
Western Resources, Inc. 15,000 476,250 95942510
3,403,932
TROY OUNCES
GAS DISTRIBUTION - 6.9%
Energen Corp. 43,500 $ 957,000 29265N10
MCN Corp. 315,400 5,795,475 55267J10
NUI Corp. 27,100 406,500 62943010
National Fuel Gas Co. 16,800 457,800 63618010
New Jersey Resources Corp. 18,400 425,500 64602510
NICOR, Inc. 37,100 918,225 65408610
Pacific Enterprises 257,800 6,316,100 69423210
Peoples Energy Corp. 21,300 559,125 71103010
WICOR, Inc. 24,700 716,300 92925310
16,552,025
GAS TRANSMISSION - 8.1%
Enron Corp. 211,600 6,982,800 29356110
ONEOK, Inc. 58,600 1,010,850 68267810
Sonat, Inc. 160,800 4,663,200 83541510
Tejas Power Corp. (a) 4,500 44,438 87907910
Transco Energy Co. 4,037 71,657 89353210
Williams Companies, Inc. 226,000 6,497,500 96945710
19,270,445
GAS TRANSMISSION & DISTRIBUTION- 5.9%
Columbia Gas System, Inc. (The) (a) 129,900 3,377,400 19764810
Consolidated Natural Gas Co. 9,400 347,800 20961510
El Paso Natural Gas Co. 13,600 418,200 28369587
ENSERCH Corp. 87,400 1,223,600 29356710
Equitable Resources, Inc. 28,150 781,163 29454910
Noram Energy Corp. 58,900 331,313 65541910
Questar Corp. 102,300 2,953,913 74835610
Tejas Gas Corp. (a) 10,300 442,900 87907510
Westcoat Energy, Inc. 218,700 3,344,518 95751D10
Yankee Energy System, Inc. 36,600 796,050 98477910
14,016,857
TOTAL GAS 53,243,259
HOLDING COMPANIES - 1.1%
HOLDING COMPANY OFFICES - 1.1%
Cinergy Corp. 108,306 2,680,574 17247410
INDEPENDENT POWER - 0.0%
STEAM SUPPLY - 0.0%
Bonneville Pacific Corp. (a) 11,300 57 09890410
METALS & MINING - 0.3%
METAL ORES - 0.3%
Cameco, Inc. 32,500 795,221 13321L10
OIL & GAS - 0.7%
CRUDE PETROLEUM & GAS - 0.2%
Nuevo Energy Corp. (a) 1,400 25,200 67050910
Occidental Petroleum Corp. 26,500 526,688 67459910
551,888
PETROLEUM REFINERS - 0.5%
Coastal Corp. (The) 39,700 1,136,413 19044110
TOTAL OIL & GAS 1,688,301
TELEPHONE SERVICES - 45.5%
AT&T Corp. 3,500 181,125 00195710
ALLTEL Corp. 15,600 446,550 02003910
Ameritech Corp. 392,200 16,815,575 03095410
BCE, Inc. 19,153 596,141 05534B10
Bell Atlantic Corp. 207,300 11,116,463 07785310
BellSouth Corp. 254,900 15,039,100 07986010
British Telecommunications PLC ADR 23,200 1,386,200 11102140
COMMON STOCKS - CONTINUED
TROY OUNCES
TELEPHONE SERVICES - CONTINUED
Cincinnati Bell, Inc. 23,200 $ 487,200 17187010
GTE Corp. 272,900 9,108,038 36232010
NYNEX Corp. 361,700 14,196,725 67076810
Pacific Telesis Group 271,800 8,154,000 69489010
SBC Communications, Inc. 380,600 15,842,475 84533310
Sprint Corp. 5,100 149,175 85206110
Telephone & Data Systems, Inc. 18,407 839,819 87943310
U.S. West, Inc. 362,259 14,037,536 91288910
TOTAL TELEPHONE SERVICES 108,396,122
TOTAL COMMON STOCKS
(Cost $212,292,202) 211,924,154
NONCONVERTIBLE PREFERRED STOCKS - 0.6%
ELECTRIC UTILITY - 0.6%
ELECTRIC & OTHER SERVICES - 0.6%
Long Island Lighting Co. $7.95
(Cost $1,595,000) 63,800 1,499,300 54267177
NONCONVERTIBLE BONDS - 0.4%
PRINCIPAL
AMOUNT
ELECTRIC UTILITY - 0.4%
ELECTRIC POWER - 0.4%
Northern Indiana Public Service Co.,
1st Mtg 8 1/4%, 7/15/03
(Cost $797,190) $ 845,000 839,719 665262AR
REPURCHASE AGREEMENTS - 10.2%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 6.08%
dated 2/28/95 due 3/1/95 $24,392,119 24,388,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $239,072,392) $ 238,651,173
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $242,280 or 0.1% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $51,484,784 and $74,722,319, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $47,308 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,759,000 and $1,301,615,
respectively. The weighted average interest rate paid was 5.0% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $238,953,646. Net unrealized depreciation
aggregated $302,473, of which $10,830,403 related to appreciated investment
securities and $11,132,876 related to depreciated investment securities.
The fund has elected to defer to its fiscal year ending February 28, 1996
$853,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
The fund hereby designates $1,379,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
UTILITIES GROWTH PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $24,388,000) (cost $239,072,392) - See $ 238,651,173
accompanying schedule
Cash 15,943
Receivable for investments sold 473,924
Receivable for fund shares sold 994,338
Dividends receivable 529,634
Interest receivable 8,582
Redemption fees receivable 245
Other receivables 647
TOTAL ASSETS 240,674,486
LIABILITIES
Payable for fund shares redeemed $ 2,727,691
Accrued management fee 122,071
Other payables and 189,518
accrued expenses
TOTAL LIABILITIES 3,039,280
NET ASSETS $ 237,635,206
Net Assets consist of:
Paid in capital $ 237,200,664
Undistributed net investment income 1,881,976
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (1,026,215
)
Net unrealized appreciation (depreciation) on investments (421,219
)
NET ASSETS, for 6,813,560 $ 237,635,206
shares outstanding
NET ASSET VALUE and redemption price per share ($237,635,206 (divided by) 6,813,560 shares) $34.88
Maximum offering price per share (100/97.00 of $34.88) $35.96
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 9,840,815
Dividends
Interest (including security lending fees of $1,155) 623,780
TOTAL INCOME 10,464,595
EXPENSES
Management fee $ 1,391,823
Transfer agent 1,556,111
Fees
Redemption fees (100,256
)
Accounting and security lending fees 225,235
Non-interested trustees' compensation 5,189
Custodian fees and expenses 20,725
Registration fees 53,181
Audit 37,541
Legal 4,296
Interest 2,339
Reports to shareholders 9,613
Miscellaneous 2,246
Total expenses before reductions 3,208,043
Expense reductions (19,897 3,188,146
)
NET INVESTMENT INCOME 7,276,449
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (690,134
)
Foreign currency transactions (1,518 (691,652
) )
Change in net unrealized appreciation (depreciation) on investment securities (7,619,880
)
NET GAIN (LOSS) (8,311,532
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (1,035,083
)
OTHER INFORMATION $485,996
Sales Charges Paid to FDC
Deferred sales charges withheld $58,366
by FDC
Exchange fees withheld by FSC $64,493
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 7,276,449 $ 9,675,531
Net investment income
Net realized gain (loss) (691,652 46,918,583
)
Change in net unrealized appreciation (depreciation) (7,619,880 (44,694,870
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,035,083 11,899,244
)
Distributions to shareholders: (6,365,877 (7,450,649
From net investment income ) )
From net realized gain (4,277,985 (32,195,614
) )
TOTAL DISTRIBUTIONS (10,643,862 (39,646,263
) )
Share transactions 155,428,275 246,579,723
Net proceeds from sales of shares
Net asset value of shares issued in exchange for the net assets of Electric Utilities Portfolio
(Note 10) - 16,679,364
Reinvestment of distributions 10,195,372 38,572,943
Cost of shares redeemed (167,054,799 (314,447,184
) )
Paid in capital portion of redemption fees 223,028 166,488
Net increase (decrease) in net assets resulting from share transactions (1,208,124 (12,448,666
) )
TOTAL INCREASE (DECREASE) IN NET ASSETS (12,887,069 (40,195,685
) )
NET ASSETS
Beginning of period 250,522,275 290,717,960
End of period (including undistributed net investment income of $1,881,976 and $3,613,887,
respectively) $ 237,635,206 $ 250,522,275
OTHER INFORMATION
Shares
Sold 4,450,667 5,763,803
Issued in exchange for the net assets of Electric Utilites Portfolio (Note 10) - 458,728
Issued in reinvestment of distributions 303,279 1,019,080
Redeemed (4,783,040 (7,406,487
) )
Net increase (decrease) (29,094 (164,876
) )
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 36.61 $ 41.49 $ 37.18 $ 35.57 $ 31.70
Income from Investment Operations
Net investment income 1.13 1.33 1.19 1.66 1.59
Net realized and unrealized gain (loss) (1.17) (.16) E 6.14 2.82 3.41
Total from investment operations (.04) 1.17 7.33 4.48 5.00
Less Distributions (1.05) (1.13) (1.33) (1.69) (.60)
From net investment income
From net realized gain (.67) (4.94) (1.70) (1.19) (.58)
Total distributions (1.72) (6.07) (3.03) (2.88) (1.18)
Redemption fees added to paid in capital .03 .02 .01 .01 .05
Net asset value, end of period $ 34.88 $ 36.61 $ 41.49 $ 37.18 $ 35.57
TOTAL RETURN B, C .21% 2.53% 20.90% 13.23% 16.25%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 237,635 $ 250,522 $ 290,718 $ 206,872 $ 197,409
Ratio of expenses to average net assets 1.42% 1.35% 1.42% A 1.51% 1.65%
Ratio of expenses to average net assets before expense reductions 1.43% 1.36% 1.42% A 1.51% 1.65%
Ratio of net investment income to average net assets 3.24% 3.11% 3.71% A 4.58% 4.75%
Portfolio turnover rate 24% 61% 34% A 45% 45%
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES OUTSTANDING
DURING THE PERIOD. E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT
CORRESPOND WITH THE AGGREGATE NET GAIN ON INVESTMENTS FOR THE PERIOD ENDED
DUE TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
BROKERAGE AND INVESTMENT MANAGEMENT
-12.62% 105.69% 110.92%
BROKERAGE AND INVESTMENT MANAGEMENT
(INCL. 3% SALES CHARGE)
-15.24% 99.52% 104.59%
S&P 500 7.36% 71.20% 246.77%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on July 29, 1985. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
BROKERAGE AND INVESTMENT
MANAGEMENT -12.62% 15.52% 8.09%
BROKERAGE AND INVESTMENT
MANAGEMENT (INCL. 3% SALES CHARGE) -15.24% 14.81% 7.75%
S&P 500 7.36% 11.35% 13.84%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Brokerage (06Standard & Poor's 50
07/29/85 9700.00 10000.00
07/31/85 9564.20 9926.31
08/31/85 9263.50 9841.93
09/30/85 8671.80 9533.88
10/31/85 9418.70 9974.35
11/30/85 10340.20 10658.59
12/31/85 10757.30 11174.46
01/31/86 11989.20 11237.04
02/28/86 12852.50 12077.57
03/31/86 13192.00 12751.50
04/30/86 13075.60 12607.41
05/31/86 13211.40 13278.12
06/30/86 13201.70 13502.52
07/31/86 12002.55 12747.73
08/31/86 13072.47 13693.61
09/30/86 11545.40 12561.15
10/31/86 12809.85 13285.93
11/30/86 12177.63 13608.78
12/31/86 11788.57 13261.75
01/31/87 13996.49 15048.11
02/28/87 14317.47 15642.51
03/31/87 14259.11 16094.58
04/30/87 12702.86 15951.34
05/31/87 12138.72 16090.11
06/30/87 12119.27 16902.66
07/31/87 12148.45 17759.63
08/31/87 12537.51 18422.06
09/30/87 12109.54 18018.62
10/31/87 7654.79 14137.41
11/30/87 7080.92 12972.49
12/31/87 7444.51 13959.69
01/31/88 7977.92 14547.40
02/29/88 8360.58 15225.31
03/31/88 8140.26 14754.84
04/30/88 8279.41 14918.62
05/31/88 7966.32 15048.41
06/30/88 8812.88 15739.14
07/31/88 8743.21 15679.33
08/31/88 8685.16 15146.23
09/30/88 8905.77 15791.46
10/31/88 8940.60 16230.46
11/30/88 8743.21 15998.37
12/31/88 8825.36 16278.34
01/31/89 9975.47 17469.91
02/28/89 9740.76 17034.91
03/31/89 9752.49 17431.83
04/30/89 9846.38 18336.54
05/31/89 10491.85 19079.17
06/30/89 10196.87 18970.42
07/31/89 11424.27 20683.44
08/31/89 11707.51 21088.84
09/30/89 11341.65 21002.38
10/31/89 10421.10 20515.12
11/30/89 10314.89 20933.63
12/31/89 10066.13 21436.04
01/31/90 9623.79 19997.68
02/28/90 9946.58 20255.65
03/31/90 10221.54 20792.42
04/30/90 9528.15 20272.61
05/31/90 10436.73 22249.19
06/30/90 10424.49 22097.90
07/31/90 10053.46 22027.18
08/31/90 8689.07 20035.93
09/30/90 7947.02 19060.18
10/31/90 7456.32 18978.22
11/30/90 7947.02 20204.21
12/31/90 8437.73 20767.91
01/31/91 9139.86 21673.39
02/28/91 10047.80 23223.04
03/31/91 11076.79 23785.03
04/30/91 11234.16 23842.12
05/31/91 11827.35 24872.10
06/30/91 11039.82 23732.96
07/31/91 11888.10 24838.91
08/31/91 12154.71 25427.59
09/30/91 12784.86 25002.95
10/31/91 13633.14 25337.99
11/30/91 12881.81 24316.87
12/31/91 15378.19 27098.72
01/31/92 15596.32 26594.68
02/29/92 15499.37 26940.42
03/31/92 15087.35 26415.08
04/30/92 13911.87 27191.68
05/31/92 13875.51 27324.92
06/30/92 13548.32 26917.78
07/31/92 14311.77 28018.72
08/31/92 13899.75 27444.33
09/30/92 13802.80 27768.18
10/31/92 14420.84 27865.36
11/30/92 15717.50 28815.57
12/31/92 16165.88 29170.00
01/31/93 17123.23 29415.03
02/28/93 17232.29 29815.08
03/31/93 18613.79 30444.17
04/30/93 18553.16 29707.43
05/31/93 19159.48 30503.58
06/30/93 20068.94 30592.05
07/31/93 20735.89 30469.68
08/31/93 22372.93 31624.48
09/30/93 22785.22 31380.97
10/31/93 22045.52 32030.56
11/30/93 21439.21 31726.27
12/31/93 24139.71 32110.15
01/31/94 24654.17 33201.90
02/28/94 23414.20 32302.13
03/31/94 20789.17 30893.75
04/30/94 20617.69 31289.19
05/31/94 21118.95 31802.34
06/30/94 21923.61 31023.18
07/31/94 21409.16 32040.74
08/31/94 21567.45 33354.41
09/30/94 20749.60 32537.23
10/31/94 20736.41 33269.31
11/30/94 19298.58 32057.65
12/31/94 19971.33 32533.06
01/31/95 19720.69 33376.64
02/28/95 20459.40 34677.33
Let's say you invested $10,000 in Fidelity Select Brokerage and Investment
Management Portfolio on July 29, 1985, when the fund started, and paid a 3%
sales charge. By February 28, 1995, your investment would have grown to
$20,459 - a 104.59% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $34,677 over the same period - a 246.77%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Edwards (A.G.), Inc. 5.7
Midland Walwyn, Inc. 5.3
Merrill Lynch & Co., Inc. 5.2
Schwab (Charles) Corp. 5.1
Morgan Stanley Group, Inc. 5.1
United Asset Management Corp. 4.7
American Express Co. 4.1
Piper Jaffray, Inc. 3.7
Perpetual PLC 3.5
Alex Brown, Inc. 3.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 16.9
Row: 1, Col: 2, Value: 4.1
Row: 1, Col: 3, Value: 6.6
Row: 1, Col: 4, Value: 10.1
Row: 1, Col: 5, Value: 10.6
Row: 1, Col: 6, Value: 51.7
Security & Commodity Brokers 51.7%
Investment Managers 10.6%
Financial Services 10.1%
Investment Advice 6.6%
Security Brokers & Dealers 4.1%
All Others 16.9%*
* INCLUDES SHORT-TERM INVESTMENTS
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Jeff Feinberg,
Portfolio Manager of Fidelity Select Brokerage and Investment
Management Portfolio
Q. JEFF, HOW HAS THE FUND PERFORMED?
A. The fund is down 12.62% for the year ended February 28, 1995. The S&P
500 returned 7.36% for the same period.
Q. WHAT FACTORS LED TO THESE DISAPPOINTING RESULTS?
A. Simply put, the fund's returns resulted from the sluggish market
environment in 1994. The market was driven by increasing interest rates
globally. In the U.S., the Federal Reserve Board's attempts to control
inflation by increasing interest rates prevented corporations from issuing
debt and equity, which negatively effected brokerage companies. However, by
the end of the period things had already begun to turn around a bit.
Investors realized that the earnings disappointments of brokerage companies
wouldn't last indefinitely, and began to bid up these stocks from depressed
levels.
Q. WHAT CHANGES DID YOU MAKE WHEN YOU TOOK OVER IN FEBRUARY OF 1995?
A. The fund was positioned defensively throughout 1994. Investments were
made abroad in an effort to avoid the choppy stock market and unstable
interest rate environment in the U.S. Unfortunately, foreign markets didn't
perform much better than the U.S. last year. Since rates have temporarily
stabilized, I've felt comfortable bringing those assets back to the U.S.
and investing in American brokerage companies again.
Q. WHAT ARE SOME OF THE CHALLENGES YOU FACE IN RUNNING THIS FUND?
A. What differentiates this fund from many others is that it has some
special limitations. For example, the SEC sets limits on the percentage of
outstanding equity the fund may hold of any particular securities firm. In
addition, there are only 65 to 70 public brokerage and investment
management stocks available for this fund to invest in. For these reasons,
stock selection is very important.
Q. IS THAT WHY YOU HAVE THE MAXIMUM AMOUNT INVESTED IN THE FUND'S TOP FIVE
HOLDINGS?
A. Exactly. I am making the most concentrated investments I can on firms in
which I have the most confidence.
Q. WHAT HAVE YOU BEEN BUYING LATELY?
A. I've been buying Merrill Lynch and Morgan Stanley; both are market
leaders in the U.S. brokerage industry - and the U.S. is the brokerage
market leader of the world. Both companies are very well managed and are
doing an excellent job of managing expenses relative to the volatile
revenue levels they experience in their industry. Secondly, both companies
were trading at the low-to-middle end of their historic trading ranges,
making them even more attractive.
Q. YET THE FUND STILL HOLDS SOME INTERNATIONAL STOCKS . . .
A. That's true. At the end of February, the fund still has positions in
selected non-U.S. stocks. I've increased the fund's position in Midland
Walwyn, a Canadian firm with good business prospects, and I've maintained
the fund's position in Perpetual, a strong financial company in the U.K.
With these two notable exceptions, I don't have much incentive to invest
abroad since markets in the U.S. have begun to stabilize. In addition, I
can get more information on U.S. companies without the potential hazards of
language barriers and currency risks. For the record, the fund got lucky
since I liquidated its position in Japanese stocks before the Kobe
earthquake, avoiding subsequent losses there.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. Although no one can predict what the market will do, I'm optimistic.
Stabilizing interest rates and quelled inflation fears are a beneficial
backdrop to corporate and individual investors who want to commit capital
to the stock market. I think that the quality companies in which the fund
has invested, along with a stable-to-improving interest rate environment,
will be a positive for the fund.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1995, more than
$27 million
MANAGER: Jeff Feinberg, since February 1995;
manager, Fidelity Select Retailing, February
1994-February 1995; equity analyst, footwear
and specialty retail industries, 1992-1994;
joined Fidelity in 1992
(checkmark)
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
AUTOS, TIRES, & ACCESSORIES - 0.0%
AUTO & TRUCK PARTS - 0.0%
Cummins Engine Co., Inc. 100 $ 4,539 23102110
BANKS - 1.4%
NATIONAL COMMERCIAL BANKS - 1.4%
Silicon Valley Bancshares (a) 25,900 382,025 82706410
COMPUTER SERVICES & SOFTWARE - 4.0%
COMPUTER RELATED SERVICES - 1.6%
Plaintree Systems, Inc. (a) 40,500 437,192 72663E10
PREPACKAGED COMPUTER SOFTWARE - 2.4%
Electronics for Imaging, Inc. (a) 17,000 667,250 28608210
TOTAL COMPUTER SERVICES & SOFTWARE 1,104,442
CREDIT & OTHER FINANCE - 13.2%
FINANCIAL SERVICES - 10.1%
American Express Co. 33,500 1,130,625 02581610
McIntosh Securities Ltd. 1,098,900 698,538 58199522
Perpetual PLC 50,000 948,313 71499822
2,777,476
MANAGEMENT & INVESTMENT OFFICES - 3.1%
Trimark Financial Corp. 28,300 855,385 89621H10
TOTAL CREDIT & OTHER FINANCE 3,632,861
SECURITIES INDUSTRY - 73.0%
INVESTMENT ADVICE - 6.6%
CI Fund Management, Inc. 38,400 293,620 12549K10
CI Fund Management, Inc. (b) 10,000 76,464 12549K92
Invesco Mim PLC 271,900 716,418 46199C92
Mutual Fund Co., Ltd.:
(For.) 18,600 471,339 65499B23
(Loc.) 9,600 243,272 65499B22
1,801,113
INVESTMENT MANAGERS - 10.6%
Peregrine Investments Holdings 447,000 546,355 71399492
Price (T. Rowe) Associates, Inc. 26,000 832,000 74147710
United Asset Management Corp. 35,100 1,303,088 90942010
Value Line, Inc. 7,400 236,800 92043710
2,918,243
SECURITY & COMMODITY BROKERS - 51.7%
Alex Brown, Inc. 24,600 934,800 01390210
Bear Stearns Companies, Inc. (a) 25,200 472,500 07390210
Edwards (A.G.), Inc. 69,000 1,552,500 28176010
First Marathon, Inc. Class A (non-vtg.) 65,200 563,060 32076L20
Jefferies Group, Inc. 15,100 458,663 47231810
McDonald & Co. Investments, Inc. 49,700 677,163 58004710
Merrill Lynch & Co., Inc. 34,700 1,422,700 59018810
Midland Walwyn, Inc. 284,700 1,459,816 59780110
Morgan Keegan, Inc. 56,700 850,500 61741010
Morgan Stanley Group, Inc. 20,800 1,401,400 61744610
Piper Jaffray, Inc. 87,500 1,028,125 72408110
Quick & Reilly Group, Inc. 16,300 570,500 74837610
Raymond James Financial, Inc. 31,400 557,350 75473010
Salomon, Inc. 3,600 129,600 79549B10
Schwab (Charles) Corp. 31,600 1,402,250 80851310
Stifel Financial Corp. 49,100 319,150 86063010
Waterhouse Investor Services, Inc. 22,500 390,938 94154710
14,191,015
SECURITY BROKERS & DEALERS - 4.1%
Finanza & Futuro Holdings SPA (a) 2,600 7,342 31799R23
PaineWebber Group, Inc. 46,600 809,675 69562910
20/20 Financial Corp. 40,100 295,797 90136T10
1,112,814
TOTAL SECURITIES INDUSTRY 20,023,185
VALUE (NOTE 1)
TOTAL COMMON STOCKS
(Cost $24,519,522) $ 25,147,052
REPURCHASE AGREEMENTS - 8.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $2,289,387 2,289,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $26,808,522) $ 27,436,052
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $76,464 or 0.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $39,153,088 and $66,342,384, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $9,202 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $11,186,000 and $5,978,500,
respectively. The weighted average interest rate paid was 4.0% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 72.2%
Canada 14.5
United Kingdom 6.1
Thailand 2.6
Australia 2.5
Hong Kong 2.0
Others (individually less than 1%) 0.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $26,826,681. Net unrealized appreciation aggregated
$609,371, of which $1,587,648 related to appreciated investment securities
and $978,277 related to depreciated investment securities.
The fund hereby designates $257,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its fiscal year ending February 28, 1996
$1,913,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
BROKERAGE AND INVESTMENT MANAGEMENT PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $2,289,000) (cost $26,808,522) - See $ 27,436,052
accompanying schedule
Receivable for investments sold 2,142,001
Receivable for fund shares sold 343,941
Dividends receivable 33,084
Redemption fees receivable 38
TOTAL ASSETS 29,955,116
LIABILITIES
Payable to custodian bank $ 18,761
Payable for investments purchased 2,063,745
Payable for fund shares redeemed 463,018
Accrued management fee 13,894
Other payables and 49,846
accrued expenses
TOTAL LIABILITIES 2,609,264
NET ASSETS $ 27,345,852
Net Assets consist of:
Paid in capital $ 27,182,437
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (464,122
)
Net unrealized appreciation (depreciation) on investments 627,537
and assets and liabilities in
foreign currencies
NET ASSETS, for 1,762,747 $ 27,345,852
shares outstanding
NET ASSET VALUE and redemption price per share ($27,345,852 (divided by) 1,762,747 shares) $15.51
Maximum offering price per share (100/97.00 of $15.51) $15.99
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 556,369
Dividends
Interest 157,280
TOTAL INCOME 713,649
EXPENSES
Management fee $ 188,068
Transfer agent 567,352
Fees
Redemption fees (50,415
)
Accounting fees and expenses 45,614
Non-interested trustees' compensation 508
Custodian fees and expenses 58,421
Registration fees 30,107
Audit 24,944
Legal 969
Interest 13,385
Reports to shareholders 5,167
Miscellaneous 518
Total expenses before reductions 884,638
Expense reductions (111,530 773,108
)
NET INVESTMENT INCOME (LOSS) (59,459
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 137,593
Foreign currency transactions 6,959 144,552
Change in net unrealized appreciation (depreciation) on:
Investment securities (6,407,636
)
Assets and liabilities in 7 (6,407,629
foreign currencies )
NET GAIN (LOSS) (6,263,077
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (6,322,536
)
OTHER INFORMATION $147,041
Sales Charges Paid to FDC
Deferred sales charges withheld $3,502
by FDC
Exchange fees withheld by FSC $39,068
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (59,459 $ (95,196
Net investment income (loss) ) )
Net realized gain (loss) 144,552 9,170,168
Change in net unrealized appreciation (depreciation) (6,407,629 5,304,530
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (6,322,536 14,379,502
)
Distributions to shareholders: - (3,536
From net investment income )
From net realized gain - (5,264,467
)
TOTAL DISTRIBUTIONS - (5,268,003
)
Share transactions 41,178,684 254,155,679
Net proceeds from sales of shares
Reinvestment of distributions - 5,046,669
Cost of shares redeemed (67,399,063 (233,513,002
) )
Paid in capital portion of redemption fees 78,929 322,223
Net increase (decrease) in net assets resulting from share transactions (26,141,450 26,011,569
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (32,463,986 35,123,068
)
NET ASSETS
Beginning of period 59,809,838 24,686,770
End of period (including accumulated net investment income (loss) of $0 and $(95,197),
respectively) $ 27,345,852 $ 59,809,838
OTHER INFORMATION
Shares
Sold 2,575,103 14,759,782
Issued in reinvestment of distributions - 301,596
Redeemed (4,181,828 (13,428,141
) )
Net increase (decrease) (1,606,725 1,633,237
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.75 $ 14.22 $ 11.48 $ 9.28 $ 7.97
Income from Investment Operations
Net investment income (loss) (.03) (.02) - .02 .08
Net realized and unrealized gain (loss) (2.25) 4.95 2.65 1.96 1.15
Total from investment operations (2.28) 4.93 2.65 1.98 1.23
Less Distributions - (.01) - (.01) (.09)
From net investment income
From net realized gain - (1.47) - - -
Total distributions - (1.48) - (.01) (.09)
Redemption fees added to paid in capital .04 .08 .09 .23 .17
Net asset value, end of period $ 15.51 $ 17.75 $ 14.22 $ 11.48 $ 9.28
TOTAL RETURN B, C (12.62)% 35.87% 23.87% 23.84% 17.90%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 27,346 $ 59,810 $ 24,687 $ 17,915 $ 11,285
Ratio of expenses to average net assets 2.54% 1.77% 2.21% A 2.17% 2.50%
Ratio of expenses to average net assets before expense reductions 2.90% 1.79% 2.21% A 2.17% 2.91%
Ratio of net investment income (loss) to average net assets (.20)% (.14)% .02% A .16% .94%
Portfolio turnover rate 139% 295% 111% A 254% 62%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
FINANCIAL SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
FINANCIAL SERVICES 4.72% 133.26% 266.06%
FINANCIAL SERVICES
(INCL. 3% SALES CHARGE) 1.58% 126.26% 255.07%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
FINANCIAL SERVICES 4.72% 18.46% 13.86%
FINANCIAL SERVICES
(INCL. 3% SALES CHARGE) 1.58% 17.74% 13.51%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Financial SerStandard & Poor's 50
02/28/85 9700.00 10000.00
03/31/85 9633.47 10007.00
04/30/85 10097.85 9997.99
05/31/85 10658.03 10575.88
06/30/85 11090.00 10741.92
07/31/85 11072.04 10725.81
08/31/85 11152.83 10634.64
09/30/85 10672.61 10301.77
10/31/85 11372.74 10777.71
11/30/85 12045.95 11517.07
12/31/85 12503.74 12074.49
01/31/86 13244.27 12142.11
02/28/86 14617.61 13050.34
03/31/86 15564.59 13778.55
04/30/86 15420.97 13622.85
05/31/86 16053.79 14347.59
06/30/86 16525.04 14590.06
07/31/86 15342.75 13774.48
08/31/86 16313.34 14796.54
09/30/86 14568.09 13572.87
10/31/86 14891.62 14356.02
11/30/86 14745.80 14704.87
12/31/86 14381.26 14329.90
01/31/87 15392.87 16260.14
02/28/87 16413.59 16902.41
03/31/87 15789.31 17390.89
04/30/87 14795.93 17236.11
05/31/87 14691.12 17386.07
06/30/87 15233.38 18264.06
07/31/87 15411.10 19190.05
08/31/87 16304.23 19905.84
09/30/87 15725.52 19469.90
10/31/87 12166.66 15276.09
11/30/87 11423.90 14017.34
12/31/87 12002.72 15084.06
01/31/88 12906.46 15719.09
02/29/88 13336.35 16451.60
03/31/88 13106.75 15943.25
04/30/88 12877.15 16120.22
05/31/88 13004.16 16260.46
06/30/88 13805.32 17006.82
07/31/88 13712.50 16942.19
08/31/88 13673.42 16366.16
09/30/88 14240.10 17063.36
10/31/88 14279.18 17537.72
11/30/88 13688.08 17286.93
12/31/88 13444.76 17589.45
01/31/89 14133.85 18877.00
02/28/89 14103.67 18406.96
03/31/89 15134.79 18835.84
04/30/89 15411.43 19813.42
05/31/89 16377.16 20615.87
06/30/89 16263.04 20498.36
07/31/89 17564.69 22349.36
08/31/89 18061.04 22787.41
09/30/89 18435.84 22693.98
10/31/89 16678.35 22167.48
11/30/89 16450.44 22619.69
12/31/89 16045.31 23162.57
01/31/90 14690.74 21608.36
02/28/90 15222.34 21887.11
03/31/90 14987.21 22467.12
04/30/90 14455.60 21905.44
05/31/90 15728.39 24041.22
06/30/90 15288.80 23877.74
07/31/90 14307.37 23801.33
08/31/90 12594.98 21649.69
09/30/90 10719.03 20595.35
10/31/90 9783.60 20506.79
11/30/90 11163.73 21831.53
12/31/90 12141.51 22440.63
01/31/91 13244.80 23419.04
02/28/91 14766.41 25093.50
03/31/91 15472.32 25700.76
04/30/91 15974.29 25762.44
05/31/91 17197.85 26875.38
06/30/91 15801.74 25644.49
07/31/91 17051.44 26839.52
08/31/91 18180.89 27475.62
09/30/91 18071.08 27016.78
10/31/91 18468.47 27378.80
11/30/91 17098.50 26275.44
12/31/91 19624.14 29281.34
01/31/92 20601.65 28736.71
02/29/92 22081.13 29110.29
03/31/92 21584.45 28542.64
04/30/92 22414.01 29381.79
05/31/92 23375.66 29525.76
06/30/92 23913.54 29085.83
07/31/92 24597.40 30275.44
08/31/92 23186.60 29654.79
09/30/92 23908.16 30004.72
10/31/92 24855.87 30109.74
11/30/92 26724.37 31136.48
12/31/92 28027.25 31519.46
01/31/93 29795.09 31784.22
02/28/93 30587.18 32216.49
03/31/93 32188.57 32896.25
04/30/93 30647.59 32100.16
05/31/93 30659.21 32960.45
06/30/93 31803.78 33056.03
07/31/93 32657.84 32923.81
08/31/93 33674.59 34171.62
09/30/93 34453.12 33908.50
10/31/93 33529.34 34610.41
11/30/93 32036.17 34281.61
12/31/93 32947.24 34696.42
01/31/94 35183.87 35876.09
02/28/94 33906.74 34903.85
03/31/94 32358.30 33382.04
04/30/94 33587.07 33809.33
05/31/94 35020.70 34363.81
06/30/94 34193.86 33521.89
07/31/94 35387.45 34621.41
08/31/94 36627.71 36040.89
09/30/94 33867.13 35157.89
10/31/94 33687.09 35948.94
11/30/94 31553.31 34639.68
12/31/94 31745.50 35153.39
01/31/95 33387.26 36064.91
02/28/95 35507.49 37470.36
Let's say you invested $10,000 in Fidelity Select Financial Services
Portfolio on February 28, 1985 and paid a 3% sales charge. By February 28,
1995, your investment would have grown to $35,507 - a 255.07% increase.
That compares to $10,000 invested in the S&P 500, which would have grown to
$37,470 over the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Federal National Mortgage Association 4.8
Allstate Corp. 4.7
Federal Home Loan Mortgage Corporation 4.4
Bank of New York Co., Inc. 4.4
Travelers, Inc. (The) 4.4
Morgan Stanley Group, Inc. 4.3
American Express Co. 4.3
Bank of Boston Corp. 4.1
Beneficial Corp. 3.7
Equitable Companies, Inc. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
National Commercial Banks 22.3%
State Banks Federal Reserve 9.3%
Federal & Federally
Sponsored Credit Agencies 9.2%
Property-Casualty &
Reinsurance 9.1%
Financial Services 7.4%
All Others 42.7%
Row: 1, Col: 1, Value: 42.7
Row: 1, Col: 2, Value: 7.4
Row: 1, Col: 3, Value: 9.1
Row: 1, Col: 4, Value: 9.199999999999999
Row: 1, Col: 5, Value: 9.300000000000001
Row: 1, Col: 6, Value: 22.3
* INCLUDES SHORT-TERM INVESTMENTS
FINANCIAL SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager
of Fidelity Select
Financial Services Portfolio
Q. HOW DID THE FUND PERFORM, LOUIS?
A. Reasonably well during the first half of the period; less so in the
second half. For the 12 months ended February 28, 1995, the fund lagged the
S&P 500. It returned 4.72% during that period, compared with the S&P's
7.36% return.
Q. WHAT CAUSED THIS "SEE-SAW" EFFECT IN FUND PERFORMANCE?
A. Interest rates played the most significant role. While rates began
rising in the first half of 1994, their impact on "spreads" - the
difference in rates between earning assets and owed liabilities - was
minimal and had little effect on the industry's earnings estimates or stock
prices. In the second half, as rates continued their rise, the impact of
narrowing spreads began to take its toll. Earnings estimates were revised
downward, and stock prices began to give back their previous gains. Thus,
in the second half, as the impact of rising interest rates in effect
"caught up" with earnings estimates, many financial services stocks were
hit quite hard.
Q. WAS THIS UNEVEN PERFORMANCE TRUE ACROSS ALL SECTORS OF THE FINANCIAL
SERVICES INDUSTRY?
A. Pretty much. When the yield curve flattens out, or spreads narrow, as
occurred in the second half of 1994, it becomes extremely difficult for
financial services companies to generate above-average returns or achieve
above-market rates of growth. The fund mainly holds commercial banks,
thrifts, secondary mortgage market agencies and brokerage and insurance
companies. Increasing interest rates had a generally negative impact on
these industry sectors across the board.
Q. AMONG THE BANK GROUP, WHICH STOCKS HELPED PERFORMANCE?
A. Bank of New York and Bank of Boston, two of the fund's largest
investments, both had good earnings in 1994 and helped support the fund's
overall performance. Both these companies are "asset-sensitive"
institutions, meaning that their liabilities, or what they owe depositors
and other funding sources, re-price more slowly than their assets, or what
customers owe them. In a rising rate environment, this tends to widen their
spreads, increase earnings and drive stock prices higher. Most banks,
however, are liability-sensitive, where the opposite relationship is true:
spreads contract when liabilities re-price more quickly than assets, which
in turn slows earnings and depresses stock prices. Fortunately, the fund
did not have big positions in banking companies with high degrees of
liability sensitivity.
Q. WERE THERE OTHER INDIVIDUAL HOLDINGS OR SECTOR GROUPS THAT HELPED THE
FUND?
A. A few names stand out. Even though the insurance industry in general
tends to be negatively affected by rising interest rates, two of the fund's
insurance stocks - Travelers and Allstate - made strong contributions to
performance. In addition, when I took over the fund in December, I
increased the fund's position in American Express, which was one of its top
10 holdings on February 28. American Express has done a good job of
containing costs and has divested subsidiaries not directly aligned with
its core consumer finance business. The company's earnings have shown
stable growth, and I believe its stock price will continue to appreciate.
Q. WHAT IS YOUR OUTLOOK FOR THE INDUSTRY AND YOUR STRATEGY FOR THE FUND
THROUGH THE END OF 1995?
A. The fund performed well over the first two months of 1995. However, my
outlook for financial services stocks depends greatly on the future course
of interest rates and the overall strength of the economy, both of which
are difficult to forecast at this point. Of particular concern if interest
rates continue rising is a further flattening of the yield curve and lower
earnings growth; and if the economy slows dramatically, credit risk
problems may ensue. I made some changes in the portfolio when I took it
over in December, basically shifting away from regional banks with
liability-sensitive balance sheets in favor of those that are more
asset-sensitive. In general, my strategy is to buy, and continue to hold,
good, well-run companies that have consistently grown book value over time
and are value-priced.
FUND FACTS
START DATE: December 10, 1981
SIZE: as of February 28, 1995, more than
$153 million
MANAGER: Louis Salemy, since December
1994; manager, Fidelity Select Regional
Banks Portfolio, since December 1994;
manager, Fidelity Select Medical Delivery
Portfolio, 1993-1994; manager, Fidelity Select
Industrial Materials Portfolio, 1992-1994;
joined Fidelity in 1992
(checkmark)
FINANCIAL SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 84.1%
SHARES VALUE (NOTE 1)
BANKS - 31.7%
COMMERCIAL BANKS - 0.1%
Norwalk Savings Society (Conn.) (a) 10,000 $ 141,250 66920410
NATIONAL COMMERCIAL BANKS - 22.3%
Bank of Boston Corp. 200,000 6,025,000 06071610
Bank Atlantic Bancorp, Inc. 30,000 476,250 06590810
BanPonce Corp. 54,700 1,654,675 06670410
Barnett Banks, Inc. 59,200 2,634,400 06805510
Benson Financial Corp. (a) 30,000 352,500 08248710
Citicorp 6,413 288,585 17303410
Comerica, Inc. 84,445 2,375,016 20034010
First Chicago Corp. 36,103 1,827,714 31945510
First Commerce Corp. 1 27 31977910
Fleet Financial Group, Inc. 119,596 3,722,426 33891510
Mercantile Bancorporation, Inc. 22,050 813,094 58734210
Midlantic Corp. 51,900 1,595,925 59780E10
NBD Bancorp, Inc. 24,100 750,113 62890010
NationsBank Corp. 55,185 2,752,352 63858510
Shawmut National Corp. 140,000 3,587,500 82048410
West One Bancorp 52,700 1,439,369 95482810
Zions Bancorporation 58,000 2,320,000 98970110
32,614,946
STATE BANKS FEDERAL RESERVE - 9.3%
Bank of New York Co., Inc. 191,334 6,409,689 06405710
Bank of New York Co., Inc. (warrants) (a) 72,700 826,963 06405711
Chemical Banking Corp. 63,700 2,555,963 16372210
Compass Bancshares, Inc. 17,200 473,000 20449H10
Crestar Financial Corp. 45,349 1,955,676 22609110
First Empire State Corp. 3,800 628,900 32007610
State Street Boston Corp. 12,600 401,625 85747310
TR Financial Corp. 18,000 288,000 87263010
13,539,816
TOTAL BANKS 46,296,012
CREDIT & OTHER FINANCE - 11.2%
FINANCIAL SERVICES - 7.3%
American Express Co. 185,000 6,243,750 02581610
Equitable Companies, Inc. 200,000 4,475,000 29444G10
10,718,750
PERSONAL CREDIT INSTITUTIONS - 3.9%
Beneficial Corp. 147,300 5,468,513 08172110
Household International, Inc. 5,922 259,088 44181510
5,727,601
TOTAL CREDIT & OTHER FINANCE 16,446,351
FEDERAL SPONSORED CREDIT - 9.2%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 9.2%
Federal Home Loan Mortgage
Corporation 110,700 6,420,600 31340030
Federal National Mortgage Association 90,600 6,987,525 31358610
13,408,125
INSURANCE - 16.3%
INSURANCE BROKERS & SERVICES - 2.2%
Alexander & Alexander Services, Inc. 150,000 3,262,500 01447610
LIFE INSURANCE - 5.0%
Providian Corp. 96,800 3,424,300 74406110
Torchmark Corp. 55,000 2,303,125 89102710
UNUM Corp. 38,500 1,636,250 90319210
7,363,675
SHARES VALUE (NOTE 1)
PROPERTY-CASUALTY & REINSURANCE - 9.1%
Allstate Corp. 251,700 $ 6,921,750 02000210
Travelers, Inc. (The) 164,633 6,400,108 89419010
13,321,858
TOTAL INSURANCE 23,948,033
REAL ESTATE INVESTMENT TRUSTS - 1.1%
REAL ESTATE INVESTMENT TRUSTS - 1.1%
Developers Diversified Realty 55,000 1,546,869 25159110
SAVINGS & LOANS - 7.8%
SAVINGS BANKS & SAVINGS & LOANS - 4.2%
Astoria Financial Corp. (a) 56,200 1,756,250 04626510
Boston Bancorp 8,500 280,500 10054810
Charter One Financial Corp. 28,000 577,500 16090310
Collective Bancorp, Inc. 37,900 739,050 19390110
Commercial Federal Corp. (a) 25,600 604,800 20164710
DS Bancor Inc. (a) 12,000 288,000 23290710
Firstbank Puerto Rico (a) 31,700 602,300 33761K10
FirstFed Michigan Corp. 5,100 123,675 33761R10
Standard Federal Bank 39,300 1,169,175 85338910
6,141,250
SAVINGS BANKS, NO FEDERAL CHARTER - 1.3%
GP Financial Corp. 70,500 1,647,938 36193510
Lakeview Financial Corp. 15,730 233,984 51222210
1,881,922
SAVINGS BANKS, FEDERAL CHARTER - 2.3%
Ahmanson (H.F.) & Co. 82,900 1,523,288 00867710
Amfed Financial, Inc. 6,400 156,800 03114410
Bay Ridge Bancorp, Inc. (a) 15,000 273,750 07253110
CSF Holdings, Inc. Class B (a) 10,200 290,700 12633510
CenFed Financial Corp. (a) 5,300 90,100 15131U10
Haven Bancorp, Inc. (a) 34,600 596,850 41935210
Quaker City Bancorp (a) 49,000 477,750 74731K10
3,409,238
TOTAL SAVINGS & LOANS 11,432,410
SECURITIES INDUSTRY - 6.8%
INVESTMENT MANAGERS - 0.2%
Mackenzie Financial Corporation 53,300 321,246 55453110
SECURITY & COMMODITY BROKERS - 4.3%
Morgan Stanley Group, Inc. 94,200 6,346,725 61744610
SECURITY BROKERS & DEALERS - 2.3%
Lehman Brothers Holdings, Inc. 120,200 2,178,625 52490810
PaineWebber Group, Inc. 67,250 1,168,469 69562910
3,347,094
TOTAL SECURITIES INDUSTRY 10,015,065
TOTAL COMMON STOCKS
(Cost $116,889,924) 123,092,865
CONVERTIBLE BONDS - 0.1%
PRINCIPAL
AMOUNT
CREDIT & OTHER FINANCE - 0.1%
FINANCIAL SERVICES - 0.1%
Lend Lease Finance International
Ltd. gtd. 4 3/4%, 6/1/03 (b)
(Cost $100,000) $ 100,000 106,000 526025AA
REPURCHASE AGREEMENTS - 15.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $23,062,894 $ 23,059,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $140,048,924) $ 146,257,865
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $106,000 or 0.1% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $110,342,627 and $106,888,195, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $56,906 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $5,632,000 and $2,476,257,
respectively. The weighted average interest rate paid was 4.4% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $140,316,516. Net unrealized appreciation
aggregated $5,941,349, of which $8,753,390 related to appreciated
investment securities and $2,812,041 related to depreciated investment
securities.
The fund hereby designates $3,721,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
FINANCIAL SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $23,059,000) (cost $140,048,924) - $ 146,257,865
See accompanying schedule
Cash 439
Receivable for investments sold 168,015
Receivable for fund shares sold 8,399,671
Dividends receivable 254,196
Interest receivable 1,174
Redemption fees receivable 596
Other receivables 22,310
TOTAL ASSETS 155,104,266
LIABILITIES
Payable for investments purchased $ 295,418
Payable for fund shares redeemed 1,560,257
Accrued management fee 67,324
Other payables and accrued expenses 92,365
TOTAL LIABILITIES 2,015,364
NET ASSETS $ 153,088,902
Net Assets consist of:
Paid in capital $ 143,524,725
Undistributed net investment income 304,699
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 3,050,537
Net unrealized appreciation (depreciation) on investments 6,208,941
NET ASSETS, for 3,174,332 shares outstanding $ 153,088,902
NET ASSET VALUE and redemption price per share ($153,088,902 (divided by) 3,174,332 shares) $48.23
Maximum offering price per share (100/97.00 of $48.23) $49.72
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 2,874,701
Dividends
Interest 433,463
TOTAL INCOME 3,308,164
EXPENSES
Management fee $ 671,165
Transfer agent 882,494
Fees
Redemption fees (75,616
)
Accounting fees and expenses 108,517
Non-interested trustees' compensation 1,867
Custodian fees and expenses 21,385
Registration fees 24,324
Audit 27,188
Legal 1,970
Interest 10,621
Reports to shareholders 7,195
Miscellaneous 1,091
Total expenses before reductions 1,682,201
Expense reductions (20,618 1,661,583
)
NET INVESTMENT INCOME 1,646,581
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 9,346,092
Foreign currency transactions 2,071 9,348,163
Change in net unrealized appreciation (depreciation) on investment securities (5,791,837
)
NET GAIN (LOSS) 3,556,326
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,202,907
OTHER INFORMATION $350,591
Sales Charges Paid to FDC
Deferred sales charges withheld $10,842
by FDC
Exchange fees withheld by FSC $44,220
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,646,581 $ 899,157
Net investment income
Net realized gain (loss) 9,348,163 30,258,224
Change in net unrealized appreciation (depreciation) (5,791,837 (19,675,121
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,202,907 11,482,260
Distributions to shareholders: (1,391,905 (452,372
From net investment income ) )
From net realized gain (6,998,318 (18,241,269
) )
TOTAL DISTRIBUTIONS (8,390,223 (18,693,641
) )
Share transactions 137,344,321 237,223,869
Net proceeds from sales of shares
Reinvestment of distributions 8,148,541 18,154,544
Cost of shares redeemed (105,579,333 (347,083,133
) )
Paid in capital portion of redemption fees 167,317 499,434
Net increase (decrease) in net assets resulting from share transactions 40,080,846 (91,205,286
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 36,893,530 (98,416,667
)
NET ASSETS
Beginning of period 116,195,372 214,612,039
End of period (including undistributed net investment income of $304,699 and $450,603, respectively)$ 153,088,902 $ 116,195,372
OTHER INFORMATION
Shares
Sold 2,833,201 4,310,339
Issued in reinvestment of distributions 192,390 361,878
Redeemed (2,118,831 (6,431,527
) )
Net increase (decrease) 906,760 (1,759,310
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 51.24 $ 53.29 $ 42.42 $ 30.55 $ 28.28
Income from Investment Operations
Net investment income .76 .29 .33 .54 .58
Net realized and unrealized gain (loss) .87 5.02 14.30 11.35 1.67
Total from investment operations 1.63 5.31 14.63 11.89 2.25
Less Distributions (.79) E (.20) (.51) (.35) (.52)
From net investment income
From net realized gain (3.93) E (7.32) (3.38) - -
Total distributions (4.72) (7.52) (3.89) (.35) (.52)
Redemption fees added to paid in capital .08 .16 .13 .33 .54
Net asset value, end of period $ 48.23 $ 51.24 $ 53.29 $ 42.42 $ 30.55
TOTAL RETURN B, C 4.72% 10.85% 36.46% 40.31% 10.51%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 153,089 $ 116,195 $ 214,612 $ 91,700 $ 35,962
Ratio of expenses to average net assets 1.54% 1.63% 1.54% A 1.85% 2.49%
Ratio of expenses to average net assets before expense reductions 1.56% 1.64% 1.54% A 1.85% 2.49%
Ratio of net investment income to average net assets 1.52% .53% .86% A 1.49% 2.22%
Portfolio turnover rate 107% 93% 100% A 164% 237%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
HOME FINANCE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
HOME FINANCE 12.43% 239.98% 396.76%
HOME FINANCE
(INCL. 3% SALES CHARGE) 9.06% 229.78% 381.86%
S&P 500 7.36% 71.20% 212.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 16, 1985. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
HOME FINANCE 12.43% 27.73% 19.01%
HOME FINANCE
(INCL. 3% SALES CHARGE) 9.06% 26.95% 18.62%
S&P 500 7.36% 11.35% 13.18%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Home Finance Standard & Poor's 50
12/16/85 9700.00 10000.00
12/31/85 9797.00 10080.42
01/31/86 11378.10 10136.87
02/28/86 12794.30 10895.11
03/31/86 13065.90 11503.06
04/30/86 12920.40 11373.07
05/31/86 13065.90 11978.12
06/30/86 14132.90 12180.55
07/31/86 13259.90 11499.66
08/31/86 13405.40 12352.93
09/30/86 11804.90 11331.35
10/31/86 12241.40 11985.16
11/30/86 12464.50 12276.40
12/31/86 12493.60 11963.36
01/31/87 14423.90 13574.82
02/28/87 15781.90 14111.03
03/31/87 14841.00 14518.83
04/30/87 14006.80 14389.62
05/31/87 13521.80 14514.81
06/30/87 13774.00 15247.80
07/31/87 13725.50 16020.87
08/31/87 14967.10 16618.45
09/30/87 14006.80 16254.50
10/31/87 11281.10 12753.28
11/30/87 10359.60 11702.41
12/31/87 11500.81 12592.97
01/31/88 12887.84 13123.13
02/29/88 12526.63 13734.67
03/31/88 12179.87 13310.27
04/30/88 12382.15 13458.01
05/31/88 12367.70 13575.09
06/30/88 13147.91 14198.19
07/31/88 13379.08 14144.24
08/31/88 13046.77 13663.33
09/30/88 13711.39 14245.39
10/31/88 14101.49 14641.41
11/30/88 13393.53 14432.04
12/31/88 13627.99 14684.60
01/31/89 14770.98 15759.52
02/28/89 15093.36 15367.10
03/31/89 15166.63 15725.16
04/30/89 15943.28 16541.29
05/31/89 16632.01 17211.21
06/30/89 16966.79 17113.11
07/31/89 17557.96 18658.42
08/31/89 18636.86 19024.13
09/30/89 19331.49 18946.13
10/31/89 16922.45 18506.58
11/30/89 16375.61 18884.12
12/31/89 14898.98 19337.33
01/31/90 13663.83 18039.80
02/28/90 14173.33 18272.51
03/31/90 14204.21 18756.73
04/30/90 13864.55 18287.82
05/31/90 15176.89 20070.88
06/30/90 15022.50 19934.40
07/31/90 13725.59 19870.61
08/31/90 12336.05 18074.30
09/30/90 11270.73 17194.08
10/31/90 10421.57 17120.15
11/30/90 11548.64 18226.11
12/31/90 12651.77 18734.62
01/31/91 13861.94 19551.45
02/28/91 15747.91 20949.38
03/31/91 16470.87 21456.35
04/30/91 17036.66 21507.85
05/31/91 17743.91 22436.99
06/30/91 16753.77 21409.37
07/31/91 18545.45 22407.05
08/31/91 19252.69 22938.10
09/30/91 19095.52 22555.03
10/31/91 18765.48 22857.27
11/30/91 17901.07 21936.12
12/31/91 20825.52 24445.61
01/31/92 22877.85 23990.92
02/29/92 24373.34 24302.81
03/31/92 23959.69 23828.90
04/30/92 24468.80 24529.47
05/31/92 26887.04 24649.67
06/30/92 26920.71 24282.39
07/31/92 28244.42 25275.53
08/31/92 26713.39 24757.39
09/30/92 27143.99 25049.52
10/31/92 27654.33 25137.20
11/30/92 30493.13 25994.38
12/31/92 32873.65 26314.11
01/31/93 35232.16 26535.14
02/28/93 35829.86 26896.02
03/31/93 37106.04 27463.53
04/30/93 35096.20 26798.91
05/31/93 34495.57 27517.12
06/30/93 35355.93 27596.92
07/31/93 37628.58 27486.53
08/31/93 39609.03 28528.27
09/30/93 42141.41 28308.61
10/31/93 42466.08 28894.59
11/30/93 40566.79 28620.10
12/31/93 41846.51 28966.40
01/31/94 43678.58 29951.26
02/28/94 42856.72 29139.58
03/31/94 42051.98 27869.09
04/30/94 43677.84 28225.82
05/31/94 46371.79 28688.72
06/30/94 47144.06 27985.85
07/31/94 48185.71 28903.78
08/31/94 49748.20 30088.84
09/30/94 48042.04 29351.66
10/31/94 45168.49 30012.07
11/30/94 42833.74 28919.03
12/31/94 42968.47 29347.90
01/31/95 44862.07 30108.89
02/28/95 48185.93 31282.24
Let's say you invested $10,000 in Fidelity Select Home Finance Portfolio on
December 16, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $48,186 - a 381.86%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $31,282 over the same period - a 212.82% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Astoria Financial Corp. 5.9
Standard Federal Bank 5.7
GP Financial Corp. 4.6
FirstFed Michigan Corp. 4.4
North Side Savings Bank (Bronx, NY) 4.2
Commercial Federal Corp. 3.6
Collective Bancorp, Inc. 3.2
Long Island Bancorp, Inc. 2.8
CenFed Financial Corp. 2.3
Reliance BanCorp, Inc. 1.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 40.6
Row: 1, Col: 2, Value: 1.6
Row: 1, Col: 3, Value: 4.6
Row: 1, Col: 4, Value: 5.7
Row: 1, Col: 5, Value: 16.0
Row: 1, Col: 6, Value: 32.0
Savings Banks and
Savings & Loans 32.0%
Savings Banks,
Federal Charter 16.0%
Savings Banks,
No Federal Charter 5.7%
National Commercial
Banks 4.6%
Commercial Banks 1.6%
All Others 40.1%*
* INCLUDES SHORT-TERM INVESTMENTS
HOME FINANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
David Ellison,
Portfolio Manager
of Fidelity Select
Home Finance Portfolio
Q. DAVE, HOW DID THE FUND PERFORM OVER THE PAST 12 MONTHS?
A. The first half of the period was much better than the second half, but
on balance, the fund did quite well. It returned 12.43% for the 12 months
ended February 28, 1995, outperforming the S&P 500's 7.36% return for the
same period.
Q. WHAT FACTORS AFFECTED PERFORMANCE?
A. Rising interest rates and their effect on mortgage lending spreads had a
dampening impact on the overall performance of the thrift institutions that
constitute the largest portion of the fund's investments. During the first
half of the period, performance among most thrift stocks was strong, buoyed
by continued earnings momentum and higher-than-normal levels of takeover
activity. Earnings were strong enough during the early part of the year to
offset the multiple increases in interest rates that occurred during that
period. But by the middle of 1994, rising rates began to narrow the
thrifts' lending spreads - the difference between what they charge for
loans and what they pay their depositors. Thinner spreads resulted in lower
earnings, which in turn drove stock prices lower and slowed acquisition
activity. By December, many stocks had receded to their 52-week lows. More
recently, however, with the prospect that rates may have stabilized, thrift
stocks have begun to come back. Fund performance in January and February
1995, in fact, was quite good.
Q. WHY ARE COMPANIES INVOLVED IN HOME FINANCE SO SENSITIVE TO INTEREST
RATES?
A. Thrifts - savings and loans institutions that are primarily engaged in
mortgage lending - generate earnings mainly through the yields produced in
their loan portfolios. Earnings are generated in proportion to the
difference, or spread, between the rate of interest the institution charges
its borrowers and the rate that it pays depositors for use of their money.
Since mortgages are long-term obligations, however, changes in short-term
interest rates can have multiple effects on this equation, which makes a
company's asset-liability management critically important in terms of
generating earnings and supporting its stock price. In a falling rate
environment, for example, deposit rates typically decrease and have the
effect of widening the spread on loans originated at higher rates of
interest. But falling rates can also have a harmful effect, as occurs when
borrowers choose to refinance at lower fixed rates. This not only reduces
the average yield of the loan portfolio, but also has the effect of
shrinking the portfolio, because thrifts typically do not keep fixed-rate
loans on their books. Similarly, when rates rise, a thrift's cost of funds
increases, but so, too, do its lending rates. Rising rates usually make
short-term, adjustable-rate mortgages (ARMs) more attractive, and since
thrifts tend to keep ARMs in their portfolios, their yields tend to benefit
over time as rates continue to rise and ARMs re-price at higher rates.
Q. WHAT'S BEEN YOUR STRATEGY IN MANAGING THROUGH THIS PERIOD OF RISING
RATES AND HOW HAS IT WORKED?
A. I tend to be a very disciplined buyer and seller of stocks. This
approach leads me to judge stocks mainly on the basis of their valuations.
I look to buy companies with good growth potential that are selling at a
discount to their book value or at a relatively small multiple of earnings.
I tend to sell them when they reach certain established benchmarks, either
on the up-side or down-side. The fund generally is invested in smaller
institutions, and there now are about 75 companies in the portfolio. Fund
performance is typically led by a group of good performers, rather than one
or two standouts. I currently have a bigger position in companies located
in the Eastern half of the country, a number of them in the metropolitan
New York City area. The reason for this geographical emphasis is that
several of these companies are thrifts that recently have converted to
public ownership and have indicated a desire to be acquired. As a group,
these stocks have done well across the board.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1995?
A. I think the first half of the year will continue to be a fairly
difficult environment for the industry. Higher rates will continue to
squeeze loan spreads and this will continue to put a drag on earnings. I
believe the second half could be somewhat better if thrifts' ARM loans
start to re-price at market rates and begin offsetting the spread pressure
that's affected the industry since mid-1994.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1995, more than
$229 million
MANAGER: David Ellison, since December
1985; manager, Fidelity Select Financial
Services Portfolio, 1985-1987; Fidelity Select
Brokerage and Investment Management
Portfolio, 1987-1990; joined Fidelity in 1985
(checkmark)
HOME FINANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 66.0%
SHARES VALUE (NOTE 1)
BANKS - 7.3%
COMMERCIAL BANKS - 1.6%
MLF Bancorp, Inc. (a) 172,000 $ 2,708,995 55306W10
Norwalk Savings Society (Conn.) (a) 62,500 882,813 66920410
3,591,808
NATIONAL COMMERCIAL BANKS - 4.6%
Bank Atlantic Bancorp, Inc. 53,900 855,663 06590810
Citicorp 71,490 3,217,050 17303410
Fed One Bancorp 36,000 423,000 31309110
Fleet Financial Group, Inc. 10,000 311,250 33891510
Midlantic Corp. 40,000 1,230,000 59780E10
Peoples Heritage Financial Group, Inc. 61,600 816,200 71114710
Shawmut National Corp. 60,000 1,537,500 82048410
TF Financial Corp. 62,500 781,250 87239110
UJB Financial Corp. 40,000 1,130,000 90276010
10,301,913
STATE BANKS FEDERAL RESERVE - 1.1%
Bank of New York Co., Inc. 60,000 2,010,000 06405710
Letchworth Independent Bancshares 15,500 317,750 52725110
T R Financial Corp. 10,000 160,000 87263010
2,487,750
TOTAL BANKS 16,381,471
CONSTRUCTION - 0.3%
OPERATIVE BUILDERS - 0.3%
Kaufman & Broad Home Corp. 35,000 511,875 48616810
Standard Pacific Corp. 35,000 240,625 85375C10
752,500
CREDIT & OTHER FINANCE - 2.2%
BANK HOLDING COMPANY OFFICES - 0.6%
IBS Financial Corp. 60,000 705,000 44922Q10
Life Bancorp, Inc. 55,000 625,625 53193210
Mid Continent Bancshares, Inc. 500 6,688 59528210
1,337,313
FINANCIAL SERVICES - 0.4%
American Express Co. 25,000 843,750 02581610
MORTGAGE BANKERS - 0.4%
Countrywide Credit Industries,Inc. 60,000 975,000 22237210
PERSONAL CREDIT INSTITUTIONS - 0.8%
Beneficial Corp. 45,000 1,670,625 08172110
TOTAL CREDIT & OTHER FINANCE 4,826,688
FEDERAL SPONSORED CREDIT - 1.6%
FEDERAL & FEDERALLY SPONSORED CREDIT AGENCIES - 1.6%
Federal National Mortgage Association 45,000 3,470,625 31358610
REAL ESTATE INVESTMENT TRUSTS - 0.9%
CWM Mortgage Holdings, Inc. 20,000 210,000 12669210
Capstead Mortgage Corp. 48,400 1,179,750 14067E10
Prime Multifamily, Inc. 45,000 703,125 74156H10
2,092,875
SAVINGS & LOANS - 53.7%
SAVINGS BANKS AND SAVINGS & LOANS - 32.0%
Andover Bancorp, Inc. (Del.) (b) 65,100 1,057,875 03425810
Astoria Financial Corp. (a) 425,400 13,293,750 04626510
Bankers Corp. 25,000 384,375 06612010
Bay View Capital, Inc. 103 2,330 07262L10
Boston Bancorp 16,100 531,300 10054810
Charter One Financial Corp. 113,500 2,340,938 16090310
Co-Operative Bank of Concord 17,000 272,000 18975110
Collective Bancorp, Inc. 367,800 7,172,100 19390110
SHARES VALUE (NOTE 1)
Commercial Federal Corp. (a) 345,200 $ 8,155,350 20164710
First Federal Savings & Loan Association
(East Hartford, Conn.) 59,300 963,625 31994410
Firstbank Puerto Rico (a) 1,695 32,205 33761K10
FirstFed Michigan Corp. 409,150 9,921,888 33761R10
Golden West Financial Corp. 3,300 126,225 38131710
Great Western Financial Corp. 6,889 129,169 39144210
Maryland Federal Bancorp, Inc. 15,000 375,000 57406110
Massbank for Savings 10,000 236,250 57615210
MidConn Bank 16,900 223,925 59564710
Monterey Bay Bancorp, Inc. 90,000 832,500 61239H10
North Side Savings Bank (Bronx, NY)(b) 434,312 9,337,708 66248810
Pamrapo Bancorp, Inc. (b) 70,600 1,429,650 69773810
SFFed Corp. 133,000 2,111,375 78413210
Standard Federal Bank 429,300 12,771,675 85338910
Webster Financial Corp.
(Waterbury, Conn.) 7,000 152,250 94789010
71,853,463
SAVINGS BANKS, NO FEDERAL CHARTER - 5.7%
Downey Financial Corp. 14,500 237,438 26101810
GP Financial Corp. 443,900 10,376,163 36193510
Medford Savings Bank (Mass.) 5,000 83,750 58430310
Queens County Bancorp, Inc. 40,000 1,140,000 74824210
Springfield Institution for Savings (a) 85,000 892,500 85071510
12,729,851
SAVINGS BANKS, FEDERAL CHARTER - 16.0%
Ahmanson (H.F.) & Co. 29,000 532,875 00867710
Albank Financial Corp. 2,000 50,750 01204610
Brooklyn Bancorp, Inc. (a) 25,000 831,250 11380910
CenFed Financial Corp. (a)(b) 299,250 5,087,250 15131U10
Coastal Bancorp, Inc. (Tex.) 10,000 157,500 19041P10
Conestoga Bancorp, Inc. 10,000 140,000 20701410
D & N Financial Corp. (a)(b) 20,000 170,000 23286410
Dime Bancorp, Inc. (a) 131,236 1,164,720 25429Q10
FFVA Financial Corp. 30,000 656,250 30242X10
HMN Financial, Inc. (a) 100,000 1,300,000 40424G10
Haven Bancorp, Inc. (a)(b) 230,000 3,967,500 41935210
Long Island Bancorp, Inc. 385,000 6,256,250 54266210
Main Street Community Bancorp 98,300 1,339,338 56035010
Pennfed Financial Services, Inc. (a) 138,900 1,649,438 70816710
Quaker City Bancorp (a) 151,000 1,472,250 74731K10
RedFed Bancorp, Inc. (a) 60,000 506,250 75734110
Reliance BanCorp, Inc. 320,700 4,088,925 75945110
Standard Financial, Inc. (a) 220,000 2,392,500 85340310
Washington Mutual, Inc. 199,600 4,016,950 93932210
35,779,996
TOTAL SAVINGS & LOANS 120,363,310
TOTAL COMMON STOCKS
(Cost $132,718,373) 147,887,469
REPURCHASE AGREEMENTS - 34.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 (Note 3) $76,222,871 76,210,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $208,928,373) $ 224,097,469
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Andover Bancorp, Inc. $ - $ 30,625 $ 33,490 $ -
Cenfed Financial Corp. 1,787,174 558,750 73,575 5,087,250
D & N Financial Corp. (a) - 1,532,617 - -
Eastern Bancorp. - 68,025 9,724 -
Fidelity FSB (Garden City, NY) (a) - 1,432,275 - -
Haven Bancorp, Inc. (a) 494,875 657,625 - 3,967,500
North Side Savings Bank (Bronx, NY) 481,775 - 100,848 9,337,708
Pamrapo Bancorp, Inc. 258,575 531,950 80,813 -
Peterborough Savings Bank (a) - 298,342 - -
Totals $ 3,022,399 $ 5,110,209 $ 298,450 $ 18,392,458
(a) Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $196,632,746 and $227,662,036, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $37,018 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $11,470,000 and $10,872,000,
respectively. The weighted average interest rate paid was 3.8% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $209,021,223. Net unrealized appreciation
aggregated $15,076,246, of which $17,036,581 related to appreciated
investment securities and $1,960,335 related to depreciated investment
securities.
The fund hereby designates $12,286,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
The fund has elected to defer to its fiscal year ending February 28, 1996
$1,328,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
HOME FINANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $76,210,000) (cost $208,928,373) - $ 224,097,469
See accompanying schedule
Cash 98
Receivable for investments sold 371,038
Receivable for fund shares sold 21,928,168
Dividends receivable 305,869
Redemption fees receivable 374
Other receivables 126,317
TOTAL ASSETS 246,829,333
LIABILITIES
Payable for investments purchased $ 15,817,608
Payable for fund shares redeemed 872,421
Accrued management fee 94,979
Other payables and accrued expenses 120,110
TOTAL LIABILITIES 16,905,118
NET ASSETS $ 229,924,215
Net Assets consist of:
Paid in capital $ 206,495,062
Undistributed net investment income 963,664
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 7,296,393
Net unrealized appreciation (depreciation) on investments 15,169,096
NET ASSETS, for 9,612,112 shares outstanding $ 229,924,215
NET ASSET VALUE and redemption price per share ($229,924,215 (divided by) 9,612,112 shares) $23.92
Maximum offering price per share (100/97.00 of $23.92) $24.66
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 2,612,130
Dividends (including $298,450 received from affiliated issuers)
Interest 1,903,400
TOTAL INCOME 4,515,530
EXPENSES
Management fee $ 1,238,263
Transfer agent fees 1,585,541
Redemption fees (185,020
)
Accounting fees and expenses 200,207
Non-interested trustees' compensation 2,413
Custodian fees and expenses 32,300
Registration fees 22,781
Audit 29,592
Legal 2,822
Interest 2,303
Reports to shareholders 10,471
Miscellaneous 2,281
Total expenses before reductions 2,943,954
Expense reductions (36,746 2,907,208
)
NET INVESTMENT INCOME 1,608,322
REALIZED AND UNREALIZED GAIN (LOSS) 20,398,138
Net realized gain (loss) on investment securities (including realized gain (loss) of $2,096,263 on sales of
investment in affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities (3,449,716
)
NET GAIN (LOSS) 16,948,422
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 18,556,744
OTHER INFORMATION $1,612,246
Sales Charges Paid to FDC
Deferred sales charges withheld $6,186
by FDC
Exchange fees withheld by FSC $147,713
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 1,608,322 $ 246,419
Net investment income
Net realized gain (loss) 20,398,138 47,403,270
Change in net unrealized appreciation (depreciation) (3,449,716 (23,478,057
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 18,556,744 24,171,632
Distributions to shareholders: (641,452 (144,027
From net investment income ) )
From net realized gain (19,377,299 (9,550,960
) )
TOTAL DISTRIBUTIONS (20,018,751 (9,694,987
) )
Share transactions 425,502,908 480,076,731
Net proceeds from sales of shares
Reinvestment of distributions 19,534,918 9,482,227
Cost of shares redeemed (369,762,089 (687,125,356
) )
Redemption fees 547,208 750,443
Net increase (decrease) in net assets resulting from share transactions 75,822,945 (196,815,955
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 74,360,938 (182,339,310
)
NET ASSETS
Beginning of period 155,563,277 337,902,587
End of period (including undistributed net investment income of $963,664 and $213,666, respectively)$ 229,924,215 $ 155,563,277
OTHER INFORMATION
Shares
Sold 16,880,752 19,770,402
Issued in reinvestment of distributions 895,378 403,141
Redeemed (14,378,596 (29,193,857
) )
Net increase (decrease) 3,397,534 (9,020,314
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 25.03 $ 22.18 $ 15.38 $ 10.84 $ 8.98
Income from Investment Operations
Net investment income .20 .03 .09 .05 .16
Net realized and unrealized gain (loss) 2.34 4.15 6.80 4.40 1.69
Total from investment operations 2.54 4.18 6.89 4.45 1.85
Less Distributions (.12) (.01) (.01) (.14) (.14)
From net investment income
From net realized gain (3.60) (1.40) (.28) - -
Total distributions (3.72) (1.41) (.29) (.14) (.14)
Redemption fees added to paid in capital .07 .08 .20 .23 .15
Net asset value, end of period $ 23.92 $ 25.03 $ 22.18 $ 15.38 $ 10.84
TOTAL RETURN B, C 12.43% 19.61% 46.43% 43.62% 22.88%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 229,924 $ 155,563 $ 337,903 $ 49,405 $ 8,782
Ratio of expenses to average net assets 1.45% 1.58% 1.55% A 2.08% 2.50%
Ratio of expenses to average net assets before expense reductions 1.47% 1.58% 1.55% A 2.08% 2.82%
Ratio of net investment income to average net assets .80% .11% .61% A .40% 1.78%
Portfolio turnover rate 124% 95% 61% A 134% 159%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
INSURANCE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
INSURANCE 9.79% 84.69% 170.98%
INSURANCE
(INCL. 3% SALES CHARGE) 6.50% 79.15% 162.86%
S&P 500 7.36% 71.20% 212.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 16, 1985. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
INSURANCE 9.79% 13.05% 11.43%
INSURANCE
(INCL. 3% SALES CHARGE) 6.50% 12.37% 11.06%
S&P 500 7.36% 11.35% 13.18%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Insurance (04Standard & Poor's 50
12/16/85 9700.00 10000.00
12/31/85 9884.30 10080.42
01/31/86 10660.30 10136.87
02/28/86 11475.10 10895.11
03/31/86 12018.30 11503.06
04/30/86 11649.70 11373.07
05/31/86 12299.60 11978.12
06/30/86 12241.40 12180.55
07/31/86 11824.30 11499.66
08/31/86 12901.00 12352.93
09/30/86 11222.90 11331.35
10/31/86 11106.50 11985.16
11/30/86 10737.90 12276.40
12/31/86 10640.90 11963.36
01/31/87 11387.80 13574.82
02/28/87 12590.60 14111.03
03/31/87 11950.40 14518.83
04/30/87 10961.00 14389.62
05/31/87 10815.50 14514.81
06/30/87 11164.70 15247.80
07/31/87 11271.40 16020.87
08/31/87 12086.20 16618.45
09/30/87 12086.20 16254.50
10/31/87 9816.40 12753.28
11/30/87 9127.70 11702.41
12/31/87 9347.07 12592.97
01/31/88 10066.08 13123.13
02/29/88 10056.23 13734.67
03/31/88 9819.84 13310.27
04/30/88 9750.90 13458.01
05/31/88 10016.83 13575.09
06/30/88 10469.90 14198.19
07/31/88 10519.15 14144.24
08/31/88 10627.49 13663.33
09/30/88 10991.92 14245.39
10/31/88 10942.67 14641.41
11/30/88 10706.29 14432.04
12/31/88 10973.60 14684.60
01/31/89 11807.79 15759.52
02/28/89 11887.24 15367.10
03/31/89 12165.30 15725.16
04/30/89 12562.54 16541.29
05/31/89 12632.05 17211.21
06/30/89 12910.00 17113.11
07/31/89 13994.12 18658.42
08/31/89 14421.80 19024.13
09/30/89 14620.72 18946.13
10/31/89 15098.13 18506.58
11/30/89 15505.92 18884.12
12/31/89 15125.04 19337.33
01/31/90 13841.22 18039.80
02/28/90 14232.39 18272.51
03/31/90 14162.18 18756.73
04/30/90 13670.71 18287.82
05/31/90 14924.45 20070.88
06/30/90 14964.57 19934.40
07/31/90 14743.91 19870.61
08/31/90 13209.34 18074.30
09/30/90 12065.93 17194.08
10/31/90 11584.50 17120.15
11/30/90 13119.07 18226.11
12/31/90 13640.62 18734.62
01/31/91 14372.80 19551.45
02/28/91 15827.13 20949.38
03/31/91 16870.24 21456.35
04/30/91 16779.97 21507.85
05/31/91 17201.23 22436.99
06/30/91 16131.94 21409.37
07/31/91 16730.92 22407.05
08/31/91 16629.40 22938.10
09/30/91 16791.84 22555.03
10/31/91 17299.45 22857.27
11/30/91 17147.17 21936.12
12/31/91 18644.06 24445.61
01/31/92 18623.68 23990.92
02/29/92 19122.89 24302.81
03/31/92 18847.82 23828.90
04/30/92 18368.98 24529.47
05/31/92 18613.49 24649.67
06/30/92 19002.89 24282.39
07/31/92 20079.57 25275.53
08/31/92 19491.28 24757.39
09/30/92 20523.57 25049.52
10/31/92 21400.45 25137.20
11/30/92 22133.04 25994.38
12/31/92 22839.19 26314.11
01/31/93 23794.10 26535.14
02/28/93 24243.47 26896.02
03/31/93 25524.17 27463.53
04/30/93 24916.83 26798.91
05/31/93 24275.05 27517.12
06/30/93 24534.01 27596.92
07/31/93 25389.72 27486.53
08/31/93 26684.54 28528.27
09/30/93 26774.62 28308.61
10/31/93 25997.72 28894.59
11/30/93 24410.16 28620.10
12/31/93 24706.64 28966.40
01/31/94 25039.68 29951.26
02/28/94 23941.89 29139.58
03/31/94 22819.42 27869.09
04/30/94 23066.11 28225.82
05/31/94 24126.91 28688.72
06/30/94 23991.22 27985.85
07/31/94 24435.28 28903.78
08/31/94 25101.36 30088.84
09/30/94 24928.67 29351.66
10/31/94 24620.30 30012.07
11/30/94 23374.48 28919.03
12/31/94 24620.30 29347.90
01/31/95 25508.41 30108.89
02/28/95 26285.50 31282.24
Let's say you invested $10,000 in Fidelity Select Insurance Portfolio on
December 16, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $26,286 - a 162.86%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $31,282 over the same period - a 212.82% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Aetna Life & Casualty Co. 5.6
General Re Corp. 5.3
Continental Corp. 5.3
Transamerica Corp. 5.2
American Express Co. 4.8
Allstate Corp. 4.4
Cincinnati Financial Corp. 4.4
American International Group, Inc. 3.8
Progressive Corp. (Ohio) 3.5
TIG Holdings, Inc. 3.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 11.4
Row: 1, Col: 2, Value: 1.9
Row: 1, Col: 3, Value: 10.0
Row: 1, Col: 4, Value: 11.9
Row: 1, Col: 5, Value: 64.8
Property-Casualty &
Reinsurance 64.8%
Multi-Line Insurance 11.9%
Financial Services 10.0%
Surety Insurance 1.9%
All Others 11.4%*
* INCLUDES SHORT-TERM INVESTMENTS
INSURANCE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Michael Tempero,
Portfolio Manager
of Fidelity Select
Insurance Portfolio
Q. MIKE, YOU RECENTLY TOOK OVER THE FUND. HOW DID IT FARE
BEFORE YOU CAME ON BOARD?
A. It did well, especially given the drop in insurance stocks during much
of 1994. For the 12 months ended February 28, 1995, the fund had a 9.79%
return, which was ahead of the S&P 500's return of 7.36%. As tends to be
the case, the fund beat the sector as a whole when the industry was
declining but lagged during the rally.
Q. WHAT HAPPENED TO TURN INSURANCE STOCKS AROUND LAST FALL?
A. Mainly changing expectations regarding interest rates. In the 1980s,
insurance stocks tended to move in the opposite direction of interest
rates. So when rates started to rise in February of 1994, investors
expected insurance stocks to fall, which they did. But as rates kept
rising, some people thought the economy would slow - causing rates to fall
again. That prospect helped push up prices on insurance stocks.
Q. WAS THERE ANY IMPROVEMENT IN THE INDUSTRY ITSELF?
A. No. In 1994, the property and casualty companies had their second worst
year ever in terms of claims paid out for disasters like the California
earthquake. However, these losses didn't hurt the industry's capacity to
write new policies. With supply remaining high, there was no pressure to
raise prices. This in turn limited insurers' earnings potential. As rates
rose, life insurers also lost business to other investment alternatives.
Q. SO WHERE DID YOU FIND OPPORTUNITIES?
A. In cheap stocks. Usually these were smaller companies with good business
prospects and a market niche like NAC Re, which reinsures smaller regional
property and casualty companies. It had the biggest impact on performance
over the year, rising 25% from September through February. Harleysville
Group, a company with a property and casualty franchise on the East Coast,
was another example. In early September, the stock hit a low, but then rose
25%. By the end of February, some of our investments such as Gryphon
Holdings, which specializes in California earthquake insurance, seem to
have been forgotten in the recent rally. Although that has hurt short-term
performance, we haven't cut back on what we own.
Q. WHY AT THE END OF THE PERIOD WERE SO MANY OF YOUR TOP STOCKS LARGER
COMPANIES?
A. As insurance stocks began to rise, new money poured into the fund. From
September to February, assets tripled. To put this new money to work
quickly, we had to invest in larger companies, which are easier to buy and
sell than smaller companies. We didn't decrease our investment in smaller
companies; we just weren't able to add to them as fast as we'd have liked.
Q. DID THE LARGER INSURERS HURT PERFORMANCE AT ALL?
A. Many actually helped as large companies were the first to rise when
insurance stocks headed back up. The fund's biggest investment at the end
of February was Aetna, which we started buying in December after its price
had fallen. This, combined with the fact that the company was going through
a restructuring to cut costs and write better policies, made the stock
attractive. Since then, Aetna has returned to its former level.
Continental, a property and casualty insurer, and General Re, a reinsurer,
were both top contributors to performance. In October, Continental's price
fell as the company was looking for a new CEO and facing a lot of potential
losses. It was so cheap, we decided to buy it. Then in December, a takeover
offer helped push Continental's price up about 35%. Gen Re did especially
well after announcing plans to buy a German reinsurance company. Of course,
there were also disappointments like Allstate, which fell 20% on news that
Sears was going to spin off the 80% it owns.
Q. WHAT'S AHEAD FOR THE FUND?
A. The industry's outlook isn't particularly positive: there's still too
much capacity to push up prices. That said, I believe there will continue
to be opportunities to make money by looking for cheap companies with
strong business prospects. If the fund's assets stay stable or shrink, more
of the smaller companies will probably again dominate the fund's top
investments.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1995, more than
$21 million
MANAGER: Michael Tempero, since February
1995; equity analyst, oil and gas domestic
exploration and production, conglomerates
and household products, since 1993; joined
Fidelity in 1993
(checkmark)
INSURANCE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 90.9%
SHARES VALUE (NOTE 1)
CREDIT & OTHER FINANCE - 10.0%
FINANCIAL SERVICES - 10.0%
American Express Co. 31,000 $ 1,046,250 02581610
Transamerica Corp. 21,000 1,147,125 89348510
2,193,375
INSURANCE - 80.9%
INSURANCE CARRIERS - 1.7%
AFLAC, Inc. 10,000 377,500 00105510
LIFE INSURANCE - 0.6%
American Bankers Insurance Group, Inc. 5,000 135,625 02445610
MULTI-LINE INSURANCE - 11.9%
Aetna Life & Casualty Co. 23,000 1,236,250 00814010
CNA Financial Corp. (a) 10,000 738,750 12611710
Lincoln National Corp. 16,000 646,000 53418710
2,621,000
PROPERTY-CASUALTY & REINSURANCE - 64.8%
Allmerica Property & Casualty Companies 35,000 682,500 01975T10
Allstate Corp. 35,000 962,500 02000210
American International Group, Inc. 8,000 830,000 02687410
Berkley (W.R.) Corp. 7,000 250,250 08442310
Chubb Corp. (The) 8,000 629,000 17123210
Cincinnati Financial Corp. 17,000 956,250 17206210
Continental Corp. 60,000 1,162,500 21132710
Exel Ltd. 12,000 511,500 30161610
General Re Corp. 9,000 1,172,250 37056310
Gryphon Holdings, Inc. (a) 35,000 481,250 40051510
Harleysville Group Inc. 23,500 587,500 41282410
Horace Mann Educators Corp. 30,000 720,000 44032710
Mid Ocean Ltd. (a) 10,000 253,750 59599D23
NAC Re Corp. 13,000 432,250 62890710
National Re Corp. 23,000 698,625 63734020
Progressive Corp. (Ohio) 20,000 777,500 74331510
St. Paul Companies, Inc. (The) 15,000 729,375 79286010
Selective Insurance Group, Inc. 21,000 593,250 81630010
TIG Holdings, Inc. 37,000 767,750 87246910
Travelers, Inc. (The) 14,000 544,250 89419010
USF&G Corp. 35,000 498,750 90329010
14,241,000
SURETY INSURANCE - 1.9%
Financial Security Assurance Holdings Ltd. 20,000 405,000 31769P10
TOTAL INSURANCE 17,780,125
TOTAL COMMON STOCKS
(Cost $18,598,489) 19,973,500
REPURCHASE AGREEMENTS - 9.1%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $1,993,337 1,993,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $20,591,489) $ 21,966,500
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $26,736,283 and $25,217,823, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $22,909 for the period (see
Note 5 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $20,617,203. Net unrealized appreciation aggregated
$1,349,297, of which $1,408,008 related to appreciated investment
securities and $58,711 related to depreciated investment securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $938,000 which will expire on February 28, 2003.
On October 26, 1990, the fund acquired all of the assets of Life Insurance
Portfolio in a tax-free exchange for shares of Insurance Portfolio. Life
Insurance Portfolio has a capital loss carryover of approximately $97,000
available to offset future realized capital gains in Insurance Portfolio,
to the extent provided by regulations.
The fund has elected to defer to its fiscal year ending February 28, 1996
$73,000 of losses recognized during the period November 1, 1994 to February
28, 1995.
INSURANCE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $1,993,000) (cost $20,591,489) - See $ 21,966,500
accompanying schedule
Cash 359
Receivable for investments sold 605,663
Receivable for fund shares sold 583,530
Dividends receivable 13,150
Redemption fees receivable 280
Other receivables 1,992
TOTAL ASSETS 23,171,474
LIABILITIES
Payable for fund shares redeemed $ 1,295,376
Accrued management fee 10,767
Other payables and accrued expenses 27,021
TOTAL LIABILITIES 1,333,164
NET ASSETS $ 21,838,310
Net Assets consist of:
Paid in capital $ 21,475,052
Undistributed net investment income 25,733
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (1,037,486
)
Net unrealized appreciation (depreciation) on investments 1,375,011
NET ASSETS, for 1,025,009 shares outstanding $ 21,838,310
NET ASSET VALUE and redemption price per share ($21,838,310 (divided by) 1,025,009 shares) $21.31
Maximum offering price per share (100/97.00 of $21.31) $21.97
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 202,114
Dividends
Interest 65,208
TOTAL INCOME 267,322
EXPENSES
Management fee $ 64,796
Transfer agent 96,721
Fees
Redemption fees (12,008
)
Accounting fees and expenses 45,049
Non-interested trustees' compensation 248
Custodian fees and expenses 13,769
Registration fees 11,143
Audit 19,876
Legal 265
Reports to shareholders 3,674
Miscellaneous 106
Total expenses before reductions 243,639
Expense reductions (2,050 241,589
)
NET INVESTMENT INCOME 25,733
REALIZED AND UNREALIZED GAIN (LOSS) (1,038,394
Net realized gain (loss) on investment securities )
Change in net unrealized appreciation (depreciation) on investment securities 1,757,862
NET GAIN (LOSS) 719,468
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 745,201
OTHER INFORMATION $103,690
Sales Charges Paid to FDC
Deferred sales charges withheld $732
by FDC
Exchange fees withheld by FSC $9,105
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 25,733 $ (4,905
Net investment income (loss) )
Net realized gain (loss) (1,038,394 2,620,140
)
Change in net unrealized appreciation (depreciation) 1,757,862 (2,713,783
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 745,201 (98,548
)
Distributions to shareholders: - (8,586
From net investment income )
From net realized gain - (1,719,115
)
TOTAL DISTRIBUTIONS - (1,727,701
)
Share transactions 33,064,318 31,795,113
Net proceeds from sales of shares
Reinvestment of distributions - 1,707,519
Cost of shares redeemed (30,429,283 (39,665,244
) )
Paid in capital portion of redemption fees 39,347 40,196
Net increase (decrease) in net assets resulting from share transactions 2,674,382 (6,122,416
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,419,583 (7,948,665
)
NET ASSETS
Beginning of period 18,418,727 26,367,392
End of period (including undistributed net investment income of $25,733 and $0, respectively) $ 21,838,310 $ 18,418,727
OTHER INFORMATION
Shares
Sold 1,639,929 1,431,358
Issued in reinvestment of distributions - 84,550
Redeemed (1,564,065 (1,788,708
) )
Net increase (decrease) 75,864 (272,800
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.41 $ 21.58 $ 18.03 $ 16.73 $ 13.63
Income from Investment Operations
Net investment income (loss) .05 - (.04) .04 .23
Net realized and unrealized gain (loss) 1.78 (.24) 5.12 1.48 2.83
Total from investment operations 1.83 (.24) 5.08 1.52 3.06
Less Distributions - (.01) - (.26) -
From net investment income
In excess of net investment income - - (.03) - -
From net realized gain - (1.96) (1.71) - -
Total distributions - (1.97) (1.74) (.26) -
Redemption fees added to paid in capital .07 .04 .21 .04 .04
Net asset value, end of period $ 21.31 $ 19.41 $ 21.58 $ 18.03 $ 16.73
TOTAL RETURN B, C 9.79% (1.24)% 31.98% 9.47% 22.74%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 21,838 $ 18,419 $ 26,367 $ 2,573 $ 2,176
Ratio of expenses to average net assets 2.34% 1.93% 2.49% A 2.47% 2.49%
Ratio of expenses to average net assets before expense reductions 2.36% 1.93% 2.52% A 2.71% 2.73%
Ratio of net investment income (loss) to average net assets .25% (.02)% (.26)% .22% 1.58%
A
Portfolio turnover rate 265% 101% 81% A 112% 98%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
REGIONAL BANKS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
REGIONAL BANKS 7.79% 154.15% 217.37%
REGIONAL BANKS
(INCL. 3% SALES CHARGE) 4.55% 146.52% 207.85%
S&P 500 7.36% 71.20% 158.12%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 30, 1986. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
REGIONAL BANKS 7.79% 20.51% 14.24%
REGIONAL BANKS
(INCL. 3% SALES CHARGE) 4.55% 19.78% 13.84%
S&P 500 7.36% 11.35% 11.55%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Regional BankStandard & Poor's 50
06/30/86 9700.00 10000.00
07/31/86 9040.40 9488.77
08/31/86 9379.90 10192.84
09/30/86 8361.40 9349.89
10/31/86 8574.80 9889.38
11/30/86 8545.70 10129.69
12/31/86 8283.80 9871.39
01/31/87 8894.90 11201.06
02/28/87 9486.60 11643.50
03/31/87 9506.00 11980.00
04/30/87 8933.70 11873.38
05/31/87 8982.20 11976.68
06/30/87 9302.30 12581.50
07/31/87 9302.30 13219.38
08/31/87 9729.10 13712.46
09/30/87 9476.90 13412.16
10/31/87 7924.90 10523.18
11/30/87 7672.70 9656.07
12/31/87 8031.30 10390.90
01/31/88 8599.98 10828.35
02/29/88 8819.46 11332.96
03/31/88 9019.00 10982.77
04/30/88 8919.23 11104.68
05/31/88 9078.86 11201.29
06/30/88 9717.37 11715.43
07/31/88 9767.26 11670.91
08/31/88 9637.56 11274.10
09/30/88 10006.70 11754.37
10/31/88 10126.42 12081.14
11/30/88 9877.00 11908.38
12/31/88 10095.78 12116.78
01/31/89 10736.79 13003.73
02/28/89 10897.04 12679.94
03/31/89 11794.44 12975.38
04/30/89 12104.26 13648.80
05/31/89 13033.71 14201.58
06/30/89 12816.92 14120.63
07/31/89 13957.64 15395.72
08/31/89 14302.01 15697.48
09/30/89 14420.38 15633.12
10/31/89 13085.96 15270.43
11/30/89 13064.44 15581.95
12/31/89 12785.92 15955.91
01/31/90 11633.94 14885.27
02/28/90 12112.98 15077.29
03/31/90 11816.43 15476.84
04/30/90 11143.49 15089.92
05/31/90 11919.08 16561.19
06/30/90 11451.44 16448.57
07/31/90 10755.69 16395.93
08/31/90 9751.98 14913.74
09/30/90 8565.77 14187.44
10/31/90 8314.84 14126.44
11/30/90 9421.21 15039.00
12/31/90 10143.17 15458.59
01/31/91 10816.29 16132.59
02/28/91 11733.12 17286.07
03/31/91 12394.63 17704.39
04/30/91 13230.22 17746.88
05/31/91 14089.03 18513.55
06/30/91 13253.44 17665.63
07/31/91 14355.95 18488.84
08/31/91 15388.84 18927.03
09/30/91 15087.10 18610.95
10/31/91 15713.79 18860.33
11/30/91 14994.25 18100.26
12/31/91 16816.66 20170.93
01/31/92 17868.47 19795.75
02/29/92 19311.64 20053.10
03/31/92 19042.58 19662.06
04/30/92 20155.53 20240.13
05/31/92 21011.66 20339.30
06/30/92 21221.30 20036.25
07/31/92 21245.92 20855.73
08/31/92 20113.46 20428.19
09/30/92 21048.97 20669.24
10/31/92 21947.55 20741.58
11/30/92 23744.72 21448.87
12/31/92 24976.51 21712.69
01/31/93 26017.20 21895.08
02/28/93 26826.62 22192.85
03/31/93 27970.10 22661.12
04/30/93 26530.18 22112.72
05/31/93 26270.84 22705.34
06/30/93 27736.09 22771.19
07/31/93 27813.89 22680.10
08/31/93 28202.90 23539.68
09/30/93 29175.41 23358.43
10/31/93 27606.42 23841.94
11/30/93 26737.64 23615.45
12/31/93 27767.00 23901.19
01/31/94 29386.35 24713.83
02/28/94 28560.80 24044.09
03/31/94 28084.52 22995.77
04/30/94 29572.74 23290.11
05/31/94 31050.57 23672.07
06/30/94 30279.53 23092.10
07/31/94 31082.70 23849.53
08/31/94 31885.87 24827.36
09/30/94 29990.39 24219.09
10/31/94 29861.88 24764.01
11/30/94 27934.27 23862.11
12/31/94 27827.60 24215.98
01/31/95 29229.24 24843.91
02/28/95 30784.71 25812.07
Let's say you invested $10,000 in Fidelity Select Regional Banks Portfolio
on June 30, 1986, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $30,785 - a 207.85%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $25,812 over the same period - a 158.12% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Bank of Boston Corp. 5.1
Bank of New York Co., Inc. 4.7
NBD Bancorp, Inc. 4.6
NationsBank Corp. 4.0
Boatmen's Bancshares, Inc. 3.8
Fleet Financial Group, Inc. 3.7
Barnett Banks, Inc. 3.6
Comerica, Inc. 3.6
BanPonce Corp. 3.3
Midlantic Corp. 3.2
TOP REGIONS AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 36.8
Row: 1, Col: 2, Value: 6.9
Row: 1, Col: 3, Value: 8.300000000000001
Row: 1, Col: 4, Value: 8.6
Row: 1, Col: 5, Value: 16.4
Row: 1, Col: 6, Value: 23.0
Northeast 23.0%
Midwest 16.4%
Southeast 8.6%
Mid-Atlantic 8.3%
West 6.9%
All Others 36.8%*
* INCLUDES SHORT-TERM INVESTMENTS
REGIONAL BANKS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Louis Salemy,
Portfolio Manager of
Fidelity Select Regional Banks Portfolio
Q. HOW DID THE FUND PERFORM, LOUIS?
A. On balance, I'd say the fund did pretty well. It returned 7.79% for the
12 months ended February 28, 1995, slightly ahead of the S&P 500's 7.36%
return. But the fund's performance worsened during the second half of the
period.
Q. WHAT CAUSED THIS DETERIORATION DURING THE SECOND HALF?
A. In part, the dynamics of the interest rate environment. When rates began
rising in early 1994, their initial impact on spreads - the difference in
rates between a bank's loans and its deposits - was beneficial to some
extent. Loans were re-priced at higher rates more quickly than customer
deposits, which represent a bank's cost of funds, and the wider spreads
helped bank earnings and propelled stock prices. What happened later in the
period was that, while rates continued to rise, the banks' cost of funds
started to increase, which narrowed spreads and squeezed earnings. In
effect, rising rates caught up with the banks' earnings estimates. So
during the second half, many regionals had to revise their earnings
projections downward and, as a result, their stocks were punished rather
severely. As an overall industry group, the regional bank stocks went down
about 10% to 15% in the second half of 1994.
Q. WAS THIS TREND TRUE FOR ALL COMPANIES IN THE CATEGORY?
A. Fortunately, it was not. Some banks are liability-sensitive, which means
that their liabilities, or what they owe depositors or other funding
sources, usually re-price more quickly than their assets, or loans, which
earn them money. In a rising-rate environment, liability-sensitive banks
tend to fare worse than those that are asset-sensitive, where loan rates
rise more quickly than deposit rates. The fund did not have big positions
in banks with high degrees of liability sensitivity, which means it avoided
some of the biggest losers in the second half. And fortunately, the fund
owned a higher concentration of asset-sensitive institutions, which helped
cushion the general downward pressure on regional bank stocks late in the
period.
Q. WHICH STOCKS DID MOST TO HELP PERFORMANCE?
A. Among the asset-sensitive banks, there were two or three that really
helped support performance, particularly in the second half. Bank of Boston
put together two strong earnings quarters, and its stock price held its
value for the most part. Bank of New York and Shawmut National also
demonstrated their staying power, although Shawmut's stock price may have
been supported more by news of its planned merger with Fleet Financial
Group. Bank of Boston and Bank of New York were the fund's two largest
holdings at the end of the period.
Q. WERE THERE ANY MAJOR DISAPPOINTMENTS?
A. No particular names stand out. As a group, the regional bank stocks were
basically flat for the period - up in the first half and down in the
second. Banks with higher degrees of liability sensitivity suffered more
than those whose balance sheets were more asset-sensitive.
Q. HAVE YOU MADE ANY SIGNIFICANT CHANGES IN THE FUND'S POSITIONING SINCE
YOU TOOK IT OVER IN DECEMBER?
A. I've made some changes. Given the generally better performance of the
asset-sensitive banks recently, I've done some re-positioning that puts
greater emphasis on these institutions. As a result, the fund is probably
more concentrated than it's been in the past. In general, I look to buy
regional banks that have good franchises in their markets and whose stocks
are reasonably priced. Barnett Bank, which I bought recently, is a good
example: it has a strong presence in Florida, it was an inexpensive buy,
and it has a fairly consistent track record of growing its book value, or
total net assets divided by stock shares outstanding.
Q. WHAT IS YOUR OUTLOOK FOR THE REGIONAL BANKS AND YOUR GAME PLAN FOR THE
FUND GOING FORWARD?
A. I am not overly optimistic about the group. There are three major
concerns I have. First, even though the domestic economy now appears to be
fairly strong, bank spreads continue to be squeezed as a result of last
year's rising interest rate environment. Second, this flattening out of the
yield curve - or narrowing of the difference between long- and short-term
interest rates - also reduces the margins banks recognize on their
securities portfolios, which in turn affects earnings and stock prices.
Third, if the economy really begins to slow down, banks will face the
inevitable possibility of increased credit risk in their loan portfolios. I
plan no major changes in strategy at the moment.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1995, more than
$164 million
MANAGER: Louis Salemy, since December
1994; manager, Fidelity Select Financial
Services Portfolio, since December 1994;
manager, Fidelity Select Medical Delivery
Portfolio, 1993-1994; manager, Fidelity Select
Industrial Materials Portfolio, 1992-1994;
joined Fidelity in 1992.
(checkmark)
REGIONAL BANKS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 76.7%
SHARES VALUE (NOTE 1)
BANKS - 73.9%
MID-ATLANTIC - 8.3%
BB & T Financial Corp. 31,915 $ 1,017,291
Crestar Financial Corp. 62,283 2,685,954 22609110
HUBCO, Inc. 75,030 1,219,238 40438210
Integra Financial Corp. 28,280 1,208,970 45810410
Midlantic Corp. 168,400 5,178,300 59780E10
Pamrapo Bancorp, Inc. 14,000 283,500 69773810
Southern National Corp. 20,000 447,500 84344410
Wachovia Corp. 39,000 1,355,250 92977110
13,396,003
MIDWEST - 16.4%
Boatmen's Bancshares, Inc. 199,100 6,172,100 09665010
Comerica, Inc. 207,300 5,830,313 20034010
Fifth Third Bancorp 20,300 1,045,450 31677310
First Bank System, Inc. 701 27,251 31927910
First Chicago Corp. 73,300 3,710,813 31945510
Mercantile Bancorporation, Inc. 40,500 1,493,438 58734210
National City Corp. 122,209 3,391,300 63540510
Northern Trust Corp. 4,700 159,800 66585910
Norwest Corp. 147,696 3,803,172 66938010
Standard Federal Bank 36,100 1,073,975 85338910
26,707,612
NORTHEAST - 23.0%
Bank of Boston Corp. 273,839 8,249,400 06071610
Bank of New York Co., Inc. 228,924 7,668,951 06405710
Banknorth Group, Inc., 26,500 669,125 06646L10
First Empire State Corp. 4,600 761,300 32007610
Fleet Financial Group, Inc. 195,000 6,069,375 33891510
NBD Bancorp, Inc. 239,700 7,460,663 62890010
North Fork Bancorporation, Inc. 72,000 1,134,000 65942410
North Side Savings Bank (Bronx, NY) 6,019 129,409 66248810
Shawmut National Corp. 197,300 5,055,813 82048410
Webster Financial Corp.
(Waterbury, Conn.) 8,200 178,350 94789010
37,376,386
SOUTHEAST - 8.6%
BanPonce Corp. 178,501 5,399,655 06670410
Barnett Banks, Inc. 131,300 5,842,850 06805510
Compass Bancshares, Inc. 5,000 137,500 20449H10
Deposit Guaranty Corp. 8,600 277,350 24955510
First Commerce Corp. 32,000 848,000 31977910
Regions Financial Corp. 34,600 1,141,800 75894010
Whitney Holding Corp. 16,800 386,400 96661210
14,033,555
SOUTHWEST - 0.7%
Liberty Bancorporation, Inc. 35,500 1,118,250 53017510
WEST - 6.9%
Bancorp Hawaii, Inc. 20,000 560,000 05968510
BankAmerica Corp. 71,800 3,455,375 06605010
CenFed Financial Corp. (a) 23,950 407,150 15131U10
First Security Corp. 59,405 1,499,976 33629410
Silicon Valley Bancshares (a) 37,200 548,700 82706410
West One Bancorp 57,200 1,562,275 95482810
Westamerica Bancorp 24,900 778,125 95709010
Zions Bancorporation 60,000 2,400,000 98970110
11,211,601
MONEY CENTER - 6.0%
Chemical Banking Corp. 126,800 5,087,850 16372210
Citicorp 103,600 4,662,000 17303410
9,749,850
SHARES VALUE (NOTE 1)
MULTI-REGIONAL - 4.0%
Keycorp 123 $ 3,567 49326710
NationsBank Corp. 131,253 6,546,243 63858510
6,549,810
TOTAL BANKS 120,143,067
CREDIT & OTHER FINANCE - 2.8%
PERSONAL CREDIT INSTITUTIONS - 2.2%
American Express Co. 50,000 1,687,500 02581610
Beneficial Corp. 50,000 1,856,250 08172110
3,543,750
SECURITY & COMMODITY BROKERS - 0.6%
Morgan Stanley Group, Inc. 13,500 909,563 61744610
TOTAL CREDIT & OTHER FINANCE 4,453,313
TOTAL COMMON STOCKS
(Cost $119,004,299) 124,596,380
REPURCHASE AGREEMENTS - 23.3%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 6.08%
dated 2/28/95 due 3/1/95
(Note 3) $ 37,970,412 37,964,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $156,968,299) $ 162,560,380
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $156,775,420 and $132,781,705, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $83,609 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $8,555,000 and $2,452,364,
respectively. The weighted average interest rate paid was 4.4% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $157,189,866. Net unrealized appreciation
aggregated $5,370,514, of which $7,343,543 related to appreciated
investment securities and $1,973,029 related to depreciated investment
securities.
The fund hereby designates $4,256,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
REGIONAL BANKS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $37,964,000) (cost $156,968,299) - See $ 162,560,380
accompanying schedule
Cash 606
Receivable for investments sold 3,633,629
Receivable for fund shares sold 3,946,325
Dividends receivable 411,154
Redemption fees receivable 298
Other receivables 1,133
TOTAL ASSETS 170,553,525
LIABILITIES
Payable for investments purchased $ 4,370,130
Payable for fund shares redeemed 1,388,205
Accrued management fee 78,511
Other payables and 113,895
accrued expenses
TOTAL LIABILITIES 5,950,741
NET ASSETS $ 164,602,784
Net Assets consist of:
Paid in capital $ 156,446,216
Undistributed net investment income 1,047,856
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 1,516,631
Net unrealized appreciation (depreciation) on investments 5,592,081
NET ASSETS, for 9,141,583 $ 164,602,784
shares outstanding
NET ASSET VALUE and redemption price per share ($164,602,784 (divided by) 9,141,583 shares) $18.01
Maximum offering price per share (100/97.00 of $18.01) $18.57
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 4,303,205
Dividends
Interest 802,491
TOTAL INCOME 5,105,696
EXPENSES
Management fee $ 892,544
Transfer agent 1,261,248
Fees
Redemption fees (128,890
)
Accounting fees and expenses 144,275
Non-interested trustees' compensation 2,293
Custodian fees and expenses 15,145
Registration fees 42,759
Audit 26,429
Legal 2,105
Interest 3,286
Reports to shareholders 7,036
Miscellaneous 1,353
Total expenses before reductions 2,269,583
Expense reductions (22,069 2,247,514
)
NET INVESTMENT INCOME 2,858,182
REALIZED AND UNREALIZED GAIN (LOSS) 6,429,187
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities (2,016,821
)
NET GAIN (LOSS) 4,412,366
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 7,270,548
OTHER INFORMATION $1,112,238
Sales Charges Paid to FDC
Deferred sales charges withheld $4,584
by FDC
Exchange fees withheld by FSC $100,050
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 2,858,182 $ 1,775,482
Net investment income
Net realized gain (loss) 6,429,187 47,667,500
Change in net unrealized appreciation (depreciation) (2,016,821 (45,382,083
) )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 7,270,548 4,060,899
Distributions to shareholders: (1,863,695 (1,037,780
From net investment income ) )
From net realized gain (6,217,044 (23,400,595
) )
TOTAL DISTRIBUTIONS (8,080,739 (24,438,375
) )
Share transactions 301,180,682 278,064,736
Net proceeds from sales of shares
Reinvestment of distributions 7,855,119 23,731,357
Cost of shares redeemed (241,446,435 (500,062,192
) )
Paid in capital portion of redemption fees 394,744 552,081
Net increase (decrease) in net assets resulting from share transactions 67,984,110 (197,714,018
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 67,173,919 (218,091,494
)
NET ASSETS
Beginning of period 97,428,865 315,520,359
End of period (including undistributed net investment income of $1,047,856 and $1,064,151,
respectively) $ 164,602,784 $ 97,428,865
OTHER INFORMATION
Shares
Sold 16,228,773 13,266,789
Issued in reinvestment of distributions 468,963 1,338,190
Redeemed (12,971,096 (24,299,694
) )
Net increase (decrease) 3,726,640 (9,694,715
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.99 $ 20.88 $ 16.48 $ 11.40 $ 9.77
Income from Investment Operations
Net investment income .37 .19 .16 .25 .22
Net realized and unrealized gain (loss) .87 .93 5.09 5.37 1.41
Total from investment operations 1.24 1.12 5.25 5.62 1.63
Less Distributions (.29) E (.15) (.11) (.15) (.15)
From net investment income
From net realized gain (.98) E (3.92) (.81) (.53) -
Total distributions (1.27) (4.07) (.92) (.68) (.15)
Redemption fees added to paid in capital .05 .06 .07 .14 .15
Net asset value, end of period $ 18.01 $ 17.99 $ 20.88 $ 16.48 $ 11.40
TOTAL RETURN B, C 7.79% 6.46% 33.10% 52.34% 18.73%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 164,603 $ 97,429 $ 315,520 $ 156,570 $ 24,212
Ratio of expenses to average net assets 1.56% 1.60% 1.49% A 1.77% 2.51%
Ratio of expenses to average net assets before expense reductions 1.58% 1.62% 1.49% A 1.77% 2.94%
Ratio of net investment income to average net assets 1.99% .88% 1.06% A 1.80% 2.34%
Portfolio turnover rate 106% 74% 63% A 89% 110%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
BIOTECHNOLOGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
BIOTECHNOLOGY -8.37% 126.55% 243.84%
BIOTECHNOLOGY
(INCL. 3% SALES CHARGE) -11.12% 119.75% 233.52%
S&P 500 7.36% 71.20% 212.82%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on December 16, 1985. You can compare these figures to the
performance of the S&P 500 - a common proxy for the U.S. stock market. This
benchmark includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
BIOTECHNOLOGY -8.37% 17.77% 14.35%
BIOTECHNOLOGY
(INCL. 3% SALES CHARGE) -11.12% 17.05% 13.97%
S&P 500 7.36% 11.35% 13.18%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select BiotechnologyStandard & Poor's 50
12/16/85 9700.00 10000.00
12/31/85 9700.00 10080.42
01/31/86 10175.30 10136.87
02/28/86 10417.80 10895.11
03/31/86 12192.90 11503.06
04/30/86 12377.20 11373.07
05/31/86 12988.30 11978.12
06/30/86 13715.80 12180.55
07/31/86 11863.10 11499.66
08/31/86 12328.70 12352.93
09/30/86 10214.10 11331.35
10/31/86 10970.70 11985.16
11/30/86 10728.20 12276.40
12/31/86 10039.50 11963.36
01/31/87 11378.10 13574.82
02/28/87 13715.80 14111.03
03/31/87 13657.60 14518.83
04/30/87 13483.00 14389.62
05/31/87 13424.80 14514.81
06/30/87 13327.80 15247.80
07/31/87 13347.20 16020.87
08/31/87 13890.40 16618.45
09/30/87 13686.70 16254.50
10/31/87 9476.90 12753.28
11/30/87 8555.40 11702.41
12/31/87 9701.08 12592.97
01/31/88 10191.13 13123.13
02/29/88 10571.17 13734.67
03/31/88 10501.17 13310.27
04/30/88 10311.14 13458.01
05/31/88 10111.12 13575.09
06/30/88 10451.16 14198.19
07/31/88 10441.16 14144.24
08/31/88 10151.13 13663.33
09/30/88 10361.15 14245.39
10/31/88 10251.14 14641.41
11/30/88 9771.08 14432.04
12/31/88 10101.12 14684.60
01/31/89 10801.20 15759.52
02/28/89 10721.19 15367.10
03/31/89 11511.28 15725.16
04/30/89 11901.32 16541.29
05/31/89 12441.38 17211.21
06/30/89 12121.35 17113.11
07/31/89 13241.47 18658.42
08/31/89 13741.53 19024.13
09/30/89 14321.59 18946.13
10/31/89 14371.60 18506.58
11/30/89 14821.65 18884.12
12/31/89 14538.80 19337.33
01/31/90 13450.93 18039.80
02/28/90 14721.80 18272.51
03/31/90 15341.99 18756.73
04/30/90 15535.16 18287.82
05/31/90 17721.06 20070.88
06/30/90 18958.59 19934.40
07/31/90 19009.99 19870.61
08/31/90 18423.96 18074.30
09/30/90 18012.71 17194.08
10/31/90 18166.93 17120.15
11/30/90 20367.12 18226.11
12/31/90 20986.43 18734.62
01/31/91 23396.61 19551.45
02/28/91 26711.92 20949.38
03/31/91 29469.41 21456.35
04/30/91 28185.39 21507.85
05/31/91 29974.60 22436.99
06/30/91 28383.14 21409.37
07/31/91 30938.29 22407.05
08/31/91 33106.29 22938.10
09/30/91 34820.78 22555.03
10/31/91 38249.77 22857.27
11/30/91 35694.62 21936.12
12/31/91 41772.50 24445.61
01/31/92 40935.22 23990.92
02/29/92 37792.53 24302.81
03/31/92 34925.11 23828.90
04/30/92 31667.73 24529.47
05/31/92 33938.72 24649.67
06/30/92 33343.04 24282.39
07/31/92 35086.05 25275.53
08/31/92 32891.61 24757.39
09/30/92 32778.75 25049.52
10/31/92 34383.83 25137.20
11/30/92 37769.55 25994.38
12/31/92 37451.88 26314.11
01/31/93 35527.21 26535.14
02/28/93 29792.77 26896.02
03/31/93 30240.98 27463.53
04/30/93 31018.75 26798.91
05/31/93 33022.51 27517.12
06/30/93 33220.25 27596.92
07/31/93 32126.09 27486.53
08/31/93 33338.90 28528.27
09/30/93 34709.89 28308.61
10/31/93 37293.69 28894.59
11/30/93 37003.67 28620.10
12/31/93 37715.53 28966.40
01/31/94 39007.43 29951.26
02/28/94 36397.27 29139.58
03/31/94 32719.31 27869.09
04/30/94 32126.09 28225.82
05/31/94 31585.61 28688.72
06/30/94 30333.25 27985.85
07/31/94 30412.35 28903.78
08/31/94 33259.80 30088.84
09/30/94 33154.34 29351.66
10/31/94 32020.63 30012.07
11/30/94 31427.41 28919.03
12/31/94 30860.56 29347.90
01/31/95 32244.74 30108.89
02/28/95 33352.08 31282.24
Let's say you invested $10,000 in Fidelity Select Biotechnology Portfolio
on December 16, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $33,352 - a 233.52%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $31,282 over the same period - a 212.82% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Genetech, Inc. 6.1
Biogen, Inc. 5.2
Amgen, Inc. 4.5
Roche Holdings Ltd. participation certificates 4.4
COR Therapeutics, Inc. 2.9
Protein Design Labs, Inc. 2.5
Teva Pharmaceuticals Industries Ltd. ADR 2.3
Upjohn Co. 2.1
Schering-Plough Corp. 1.7
Abbott Laboratories 1.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 35.4
Row: 1, Col: 2, Value: 1.4
Row: 1, Col: 3, Value: 3.3
Row: 1, Col: 4, Value: 5.8
Row: 1, Col: 5, Value: 22.1
Row: 1, Col: 6, Value: 32.0
Biotechnology 32.0%
Drugs 22.1%
Pharmaceutical
Preparations 5.8%
Medical Supplies &
Appliances 3.3%
Medical Technology 1.4%
All Others 35.4%*
* INCLUDES SHORT-TERM INVESTMENTS
BIOTECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Karen Firestone,
Portfolio Manager of Fidelity Select
Biotechnology Portfolio
Q. HOW HAS THE FUND PERFORMED, KAREN?
A. The fund is down 8.37% for the year ended February 28, 1995. The S&P 500
returned 7.36% for the same period.
Q. WHAT FACTORS LED TO DISAPPOINTING RESULTS?
A. Last year was a bleak one for the biotechnology industry in general. The
market continued to be discouraged by lackluster clinical drug trial
results, and only one new drug won Food and Drug Administration approval.
So far, 1995 has been better with the fund returning 3.43% in February
alone.
Q. WHAT'S YOUR INVESTMENT STRATEGY IN SUCH A TOUGH MARKET ENVIRONMENT?
A. I've reduced the fund's holdings in single-product companies whose fate
is determined by the results of one clinical trial or FDA meeting. Those
stocks aren't attractive to me right now since I don't believe the reward
is commensurate with the risk. For example, if a drug trial goes well, the
stock may go up 30%; if the drug doesn't work the stock may go down 75%. My
feeling is that if the results are good, I can buy the stock afterwards and
still get a good value.
Q. WHAT TRENDS HAVE EMERGED IN THE BIOTECH FIELD RECENTLY?
A. There's been a divergence between the companies that can attract
investors and the money to spend on new product development and those
companies that can't. The larger-capitalized, revenue-producing companies
that the fund is heavily invested in - such as Genentech, Biogen and Amgen
- - have been doing well. For that reason, I'm feeling less defensive than I
was six months ago and generally more optimistic about the industry.
Q. YOU'VE MORE THAN DOUBLED THE FUND'S HOLDING IN BIOGEN FROM 2.2% OF THE
FUND SIX MONTHS AGO TO 5.2% AS OF FEBRUARY 28, 1995. IS BIOGEN ONE OF THE
COMPANIES THAT HAS BEEN ABLE TO ATTRACT CAPITAL?
A. Absolutely. I've been accumulating a larger position in Biogen because
of the company's success with beta interferon, a drug to treat multiple
sclerosis. The stock has traveled a bumpy road, but when it goes down I
usually buy more. I think the drug will be approved and the company will be
successful - especially since it currently has no meaningful competition.
Q. WHAT'S BEEN HAPPENING WITH SOME OF THE FUND'S OTHER TOP HOLDINGS?
A. Genentech, a very broad-based drug company, continues to be the fund's
largest holding. The story there is that Hoffman La Roche, a Swiss drug
company, has an option to buy 35% of the company it doesn't already own. I
started selling my position in late December when it became obvious to me
that the buyout wouldn't take place by the end of December as many people
expected. After the first of the year the stock went down and I began
aggressively buying the stock back. It's starting to look like the company
will be bought by Hoffman La Roche at the end of the year. In the meantime,
the company may have some good data coming out on a new allergy drug later
this year. In addition, I've reduced my position in Amgen recently. The
stock has had a good run and reached such a high price that I decided to
take profits.
Q. YOU'VE TALKED A LOT ABOUT SOME OF THE LARGER BIOTECH FIRMS. DOES THE
FUND OWN ANY SMALLER COMPANIES.
A. Yes. Even though the market is currently favoring larger-capitalized
companies, there are some smaller stocks that are attractive. I've been
investing in companies where the data supports higher stock prices. I'm
looking for quality in this industry, not just size. Cor Therapeutics is a
company that I believe has drugs that are going to work and will be good,
long-term holdings for the fund.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. My emphasis continues to be on the top 20 holdings in the fund. I've
positioned the fund in what I consider to be the strongest stocks in the
industry that have begun to turn around and should continue to do well.
Although there are risks involved, I believe the market is starting to look
more positive for biotechnology stocks.
FUND FACTS
START DATE: December 16, 1985
SIZE: as of February 28, 1995, more than
$448 million
MANAGER: Karen Firestone, since August
1992; manager, Fidelity Select Health Care
Fund since February 1995; manager, Fidelity
Select Air Transportation Portfolio, September
1987- November 1992; Fidelity Select
Leisure Portfolio, April 1989-August 1992;
joined Fidelity in 1983
(checkmark)
BIOTECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 69.0%
SHARES VALUE (NOTE 1)
AGRICULTURE - 0.1%
CROPS - 0.1%
DEKALB Genetics Corp. Class B 23,700 $ 676,922 24487820
CELLULAR - 0.2%
CELLULAR & COMMUNICATION SERVICES - 0.2%
Millicom International Cellular SA (a) 26,942 734,170 60081492
COMPUTER SERVICES & SOFTWARE - 0.8%
COMPUTER SERVICES - 0.8%
Cerner Corp. (a) 79,400 3,682,175 15678210
DRUGS & PHARMACEUTICALS - 61.4%
BIOTECHNOLOGY - 32.0%
Advanced Tissue Sciences Corp.
Class A (a) 22,000 195,250 00755F10
Alkermes, Inc. (a)(c) 335,900 976,209 01642T10
Amgen, Inc. (a) 299,800 20,686,200 03116210
Athena Neurosciences, Inc. (a) 302,700 2,686,463 04685410
Bio-Rad Laboratories, Inc. Class A (a) 76,000 2,109,000 09057220
Biochem Pharmaceutical, Inc. (a) 100,000 1,385,341 09058T10
Biogen, Inc. (a) 579,700 23,912,625 09059710
Cambridge Neuroscience, Inc. (a) 93,900 528,188 13242610
Cell Genesys, Inc. (a) 139,000 903,500 15092110
Cellpro, Inc. (a) 136,900 1,557,238 15115610
Celtrix Laboratories, Inc. (a) 213,700 400,688 15118610
Centocor, Inc. (a) 138,400 2,638,250 15234210
Cephalon, Inc. (a) 100,000 812,500 15670810
Chiron Corp. (a) 49,086 2,981,975 17004010
Collagen Corp. 30,300 825,675 19419410
COR Therapeutics, Inc. (a)(c) 978,000 13,203,000 21775310
Creative Biomolecules, Inc. (a) 58,100 188,825 22527010
Dynagen, Inc. (warrants) (a) 40,000 43,750 26791712
Genentech, Inc. (a) 557,800 28,029,450 36871020
Genetics Institute, Inc.(a):
depositary share 167,380 6,025,680 37185530
(warrants) 40,000 420,000 37185511
Genzyme Corp. 81,400 3,154,250 37291710
Genzyme Corp.-Tissue Repair (a) 28,539 114,156 37291740
Gilead Sciences, Inc. (a) 21,300 303,525 37555810
Idexx Laboratories (a) 51,000 1,938,000 45168D10
Imclone Systems, Inc. (a) 146,500 54,938 45245W10
Insite Vision, Inc. (a)(c) 689,700 2,586,375 45766010
Liposome Co, Inc. (a)(c) 100,000 675,000 53631110
Magainin Pharmaceuticals, Inc. (a) 342,400 1,326,800 55903610
Neurogen Corp. (a)(c) 317,900 2,861,100 64124E10
North American Biologicals, Inc. (a) 32,000 272,000 65675510
North American Vaccine, Inc. (a) 393,300 3,146,400 65720110
Protein Design Labs, Inc. (a) 687,100 11,594,813 74369L10
SciGenics, Inc. (a)(c) 122,000 1,433,500 80890410
Somatix Therapy Corp. (a) 649,600 2,923,200 83444710
Univax Biologics, Inc. (a) 462,700 3,123,225 91335G10
Vical, Inc. (a) 248,900 2,053,425 92560210
148,070,514
COMMERCIAL LABORATORY RESEARCH - 0.7%
Cantab Pharmaceutical
Sponsored ADR (a) 5,000 18,750 13808410
Cryomedical Sciences, Inc. (a) 343,000 1,114,750 22904910
Medarex Inc. (a)(b) 175,000 678,125 58391692
Medarex, Inc. (warrants) (a) 175,000 153,125 58391611
Scios, Inc. (a) 176,303 1,454,500 80890510
3,419,250
SHARES VALUE (NOTE 1)
DRUGS - 22.1%
A.L. Laboratories, Inc. Class A 116,700 $ 2,377,763 00162910
Allergan, Inc. 164,100 4,738,388 01849010
Astra AB Free shares 40,000 1,006,933 04632292
Astra AB Class B Free Shares 165,000 4,075,017 04632299
Elan Corp. PLC (a):
ADR 182,315 6,426,604 28413120
(warrants) 76,575 1,512,356 28413112
therapeutic systems unit (1 Common &
1 ADR warrant) 30,339 841,907 28413140
IVAX Corp. 332,532 7,191,005 46582310
Lilly (Eli) & Co. 115,000 7,705,000 53245710
Lynx Therapeutics, Inc. (a) 193,995 2 55181210
Mylan Laboratories, Inc. 123,400 3,856,250 62853010
Novo-Nordisk AS Class B 15,500 1,559,048 67010010
Novo Industri A/S ADR 16,000 402,000 67010020
Pfizer, Inc. 52,800 4,369,200 71708110
Roche Holdings Ltd.
(participation certificates) 3,650 20,181,139 77157092
Schering-Plough Corp. 100,000 7,837,500 80660510
Schering Plough Corp. (a)(d) 6,300 177,849 80660540
Teva Pharmaceutical Industries
Ltd. ADR 414,600 10,753,688 88162420
Upjohn Co. 275,000 9,693,750 91530210
Vertex Pharmaceuticals, Inc. (a) 28,500 463,125 92532F10
Warner-Lambert Co. 22,000 1,680,250 93448810
Watson Pharmaceuticals, Inc. (a) 221,100 5,707,144 94268310
102,555,918
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCES - 0.1%
Igen, Inc. (a) 123,900 696,938 44953610
MEDICINAL CHEMICALS - 0.7%
Martek Biosciences (a) 300,000 3,150,000 57290110
PHARMACEUTICAL PREPARATIONS - 5.8%
Circa Pharmaceuticals, Inc. (a) 417,900 7,156,538 17253C10
Cocensys, Inc. (a) 206,000 824,000 19126310
Guilford Pharmaceuticals, Inc. (a) 140,000 752,500 40182910
Immunex Corp. (a) 297,500 4,983,125 45252810
Inhale Therapeutic Systems (a) 174,000 1,696,500 45719110
Ligand Pharmaceuticals, Inc. Class B (a) 201,665 1,386,447 53220K20
Neurobiological Technologies, Inc. (a) 57,900 285,881 64124W10
Rhone Poulenc Rorer, Inc. 12,200 497,150 76242T10
T Cell Sciences, Inc. (a) 394,100 1,182,300 87234210
Theratech, Inc. (a) 130,000 1,365,000 88338310
Wellcome PLC sponsored ADR 100,000 1,612,500 94947820
Zeneca Group PLC:
Ord. 225,000 3,110,207 98934D92
sponsored ADR 45,000 1,861,875 98934D10
26,714,023
TOTAL DRUGS & PHARMACEUTICALS 284,606,643
ELECTRICAL EQUIPMENT - 0.0%
TV & RADIO COMMUNICATION EQUIPMENT - 0.0%
ASN (warrants) (a) 5,000 - 04599F22
INDUSTRIAL MACHINERY & EQUIPMENT - 0.1%
SPECIAL INDUSTRIAL MACHINERY - 0.1%
Perseptive Technologies Corp. unit
(1 Common & 1 warrant) (a) 100,000 512,500 71527520
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
MEDICAL EQUIPMENT & SUPPLIES - 4.7%
MEDICAL SUPPLIES & APPLIANCES - 3.3%
Abaxis, Inc. (a) 118,000 $ 501,500 00256710
Abbott Laboratories 220,000 7,810,000 00282410
Baxter International, Inc. 50,000 1,556,250 07181310
Boston Scientific Corp. (a) 249,005 5,384,733 10113710
15,252,483
MEDICAL TECHNOLOGY - 1.4%
Advanced Technology Laboratories, Inc. (a) 108,700 1,684,850 00755N10
St. Jude Medical, Inc. 127,400 4,618,250 79084910
6,303,100
TOTAL MEDICAL EQUIPMENT & SUPPLIES 21,555,583
MEDICAL FACILITIES MANAGEMENT - 1.7%
HEALTH SERVICES - 0.2%
Healthwise America, Inc. (a) 22,950 740,138 42221L10
HMO'S & OUTPATIENT CARE - 0.3%
U.S. Healthcare, Inc. 31,200 1,341,600 91191010
MEDICAL LABORATORIES - 0.2%
Health Images, Inc. 71,200 391,600 42217810
Spectral Diagnostics, Inc. (a) 24,600 497,913 84757410
889,513
MEDICAL SERVICES - 0.8%
Surgical Care Affiliates, Inc. 188,000 3,948,000 86881810
SKILLED NURSING CARE FACILITIES - 0.2%
Mariner Health Group, Inc. (a) 50,000 862,500 56845J10
TOTAL MEDICAL FACILITIES MANAGEMENT 7,781,751
TOTAL COMMON STOCKS
(Cost $303,503,194) 319,549,744
REPURCHASE AGREEMENTS - 31.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 (Note 3) $143,675,261 143,651,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $447,154,194) $ 463,200,744
LEGEND
1. Non-income producing
2. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Medarex, Inc. 12/18/92 $ 853,125
3. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Alkermes, Inc. (a) $ 68,750 $ 720,113 $ - $ -
COR Therapeutics, Inc. (a) 502,925 195,413 - 13,203,000
Insite Vision, Inc. (a) 432,068 - - 2,586,375
Liposome Co, Inc. (a) - 1,831,434 - -
Neurogen Corp. (a) - 123,750 - -
SciGenics, Inc. (a) 151,250 - - 1,433,500
Totals $ 1,154,993 $ 2,870,710 $ - $ 17,222,875
(a) Non-income producing
4. Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $177,849 or 0.0% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $260,414,253 and $337,510,812, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $86,356 for the period (see
Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,956,700 and $4,164,600, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $1,448,000 and $1,390,500,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 87.1%
Switzerland 4.4
Israel 2.3
Ireland 1.9
United Kingdom 1.4
Sweden 1.1
Canada 1.1
Others (individually less than 1%) 0.7
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $449,705,000. Net unrealized appreciation
aggregated $13,495,744, of which $43,570,547 related to appreciated
investment securities and $30,074,803 related to depreciated investment
securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $33,875,000 of which $10,904,000 and $22,971,000 will expire
on February 28, 2002 and February 28, 2003, respectively.
The fund has elected to defer to its fiscal year ending February 28, 1996
$5,719,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
BIOTECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $143,651,000) (cost $447,154,194) - $ 463,200,744
See accompanying schedule
Cash 791
Receivable for investments sold 2,228,972
Receivable for fund shares sold 2,609,578
Dividends receivable 245,096
Redemption fees receivable 660
Other receivables 418,916
TOTAL ASSETS 468,704,757
LIABILITIES
Payable for investments purchased $ 8,040,462
Payable for fund shares redeemed 4,159,272
Accrued management fee 228,703
Other payables and 3,914,950
accrued expenses
Collateral on securities loaned, at value 4,164,600
TOTAL LIABILITIES 20,507,987
NET ASSETS $ 448,196,770
Net Assets consist of:
Paid in capital $ 473,873,209
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (41,722,989
)
Net unrealized appreciation (depreciation) on investments 16,046,550
NET ASSETS, for 17,713,733 $ 448,196,770
shares outstanding
NET ASSET VALUE and redemption price per share ($448,196,770 (divided by) 17,713,733 shares) $25.30
Maximum offering price per share (100/97.00 of $25.30) $26.08
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 1,609,631
Dividends
Interest (including security lending fees of $151,227) 3,861,105
TOTAL INCOME 5,470,736
EXPENSES
Management fee $ 2,565,447
Transfer agent 3,575,952
Fees
Redemption fees (182,721
)
Accounting and security lending fees 427,062
Non-interested trustees' compensation 9,257
Custodian fees and expenses 50,409
Registration fees 41,774
Audit 56,230
Legal 8,781
Interest 636
Reports to shareholders 28,758
Miscellaneous 3,929
Total expenses before reductions 6,585,514
Expense reductions (17,224 6,568,290
)
NET INVESTMENT INCOME (LOSS) (1,097,554
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (including realized gain (loss) of $(1,194,801) on sales of investment in
affiliated (28,005,811
issuers) )
Foreign currency transactions 5,354 (28,000,457
)
Change in net unrealized appreciation (depreciation) on investment securities (10,252,135
)
NET GAIN (LOSS) (38,252,592
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (39,350,146
)
OTHER INFORMATION $937,105
Sales Charges Paid to FDC
Deferred sales charges withheld $38,451
by FDC
Exchange fees withheld by FSC $122,513
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (1,097,554 $ (3,787,601
Net investment income (loss) ) )
Net realized gain (loss) (28,000,457 (8,338,254
) )
Change in net unrealized appreciation (depreciation) (10,252,135 118,233,161
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (39,350,146 106,107,306
)
Share transactions 208,388,703 439,265,841
Net proceeds from sales of shares
Cost of shares redeemed (202,202,871 (573,106,933
) )
Paid in capital portion of redemption fees 214,866 886,916
Net increase (decrease) in net assets resulting from share transactions 6,400,698 (132,954,176
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (32,949,448 (26,846,870
) )
NET ASSETS
Beginning of period 481,146,218 507,993,088
End of period (including accumulated net investment loss of $0 and $(3,787,602), respectively) $ 448,196,770 $ 481,146,218
OTHER INFORMATION
Shares
Sold 8,583,014 16,958,709
Redeemed (8,294,600 (22,006,765
) )
Net increase (decrease) 288,414 (5,048,056)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.61 $ 22.60 $ 27.61 $ 26.78 $ 15.28
Income from Investment Operations
Net investment income (loss) (.06) (.18) (.08) (.11) .05 E
Net realized and unrealized gain (loss) (2.26) 5.15 (1.09) 3.36 11.80
Total from investment operations (2.32) 4.97 (1.17) 3.25 11.85
Less Distributions - - - (.02) -
In excess of net investment income
From net realized gain - - (3.89) (2.52) (.67)
Total distributions - - (3.89) (2.54) (.67)
Redemption fees added to paid in capital .01 .04 .05 .12 .32
Net asset value, end of period $ 25.30 $ 27.61 $ 22.60 $ 27.61 $ 26.78
TOTAL RETURN B, C (8.37)% 22.17% (5.92)% 12.36% 81.43%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 448,197 $ 481,146 $ 507,993 $ 679,877 $ 482,271
Ratio of expenses to average net assets 1.59% 1.61% 1.50% A 1.50% 1.63%
Ratio of expenses to average net assets before expense reductions 1.59% 1.62% 1.50% A 1.50% 1.63%
Ratio of net investment income (loss) to average net assets (.27)% (.69)% (.37)% (.34)% .24%
A
Portfolio turnover rate 77% 51% 79% A 160% 166%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME (LOSS) PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH
AMOUNTED TO $.02 PER SHARE.
HEALTH CARE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
HEALTH CARE 31.24% 170.38% 528.89%
HEALTH CARE
(INCL. 3% SALES CHARGE) 27.30% 162.27% 510.03%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
HEALTH CARE 31.24% 22.01% 20.19%
HEALTH CARE
(INCL. 3% SALES CHARGE) 27.30% 21.27% 19.82%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Health (063) Standard & Poor's 50
02/28/85 9700.01 10000.00
03/31/85 9922.40 10007.00
04/30/85 10329.32 9997.99
05/31/85 11602.15 10575.88
06/30/85 11860.36 10741.92
07/31/85 11969.38 10725.81
08/31/85 11694.44 10634.64
09/30/85 10751.11 10301.77
10/31/85 11457.43 10777.71
11/30/85 12533.49 11517.07
12/31/85 12870.05 12074.49
01/31/86 12955.38 12142.11
02/28/86 13870.26 13050.34
03/31/86 15723.74 13778.55
04/30/86 15913.35 13622.85
05/31/86 16899.35 14347.59
06/30/86 18032.29 14590.06
07/31/86 16742.87 13774.48
08/31/86 17360.67 14796.54
09/30/86 14990.04 13572.87
10/31/86 16297.48 14356.02
11/30/86 16058.02 14704.87
12/31/86 15698.83 14329.90
01/31/87 18040.73 16260.14
02/28/87 20717.86 16902.41
03/31/87 20593.35 17390.89
04/30/87 20104.85 17236.11
05/31/87 20301.21 17386.07
06/30/87 20784.91 18264.06
07/31/87 21579.91 19190.05
08/31/87 22216.87 19905.84
09/30/87 21800.21 19469.90
10/31/87 16048.44 15276.09
11/30/87 14491.97 14017.34
12/31/87 15598.59 15084.06
01/31/88 16757.88 15719.09
02/29/88 17261.06 16451.60
03/31/88 16831.87 15943.25
04/30/88 16570.42 16120.22
05/31/88 16526.02 16260.46
06/30/88 16960.14 17006.82
07/31/88 16935.47 16942.19
08/31/88 16476.69 16366.16
09/30/88 17029.20 17063.36
10/31/88 17241.32 17537.72
11/30/88 16738.14 17286.93
12/31/88 16975.75 17589.45
01/31/89 18174.45 18877.00
02/28/89 17826.28 18406.96
03/31/89 18766.34 18835.84
04/30/89 19790.95 19813.42
05/31/89 20407.71 20615.87
06/30/89 19947.70 20498.36
07/31/89 22418.57 22349.36
08/31/89 22960.95 22787.41
09/30/89 23126.68 22693.98
10/31/89 22955.93 22167.48
11/30/89 23945.28 22619.69
12/31/89 24188.48 23162.57
01/31/90 22800.62 21608.36
02/28/90 22561.68 21887.11
03/31/90 23461.51 22467.12
04/30/90 23461.51 21905.44
05/31/90 26689.69 24041.22
06/30/90 27599.08 23877.74
07/31/90 27980.13 23801.33
08/31/90 26725.86 21649.69
09/30/90 25921.44 20595.35
10/31/90 26514.17 20506.79
11/30/90 29334.94 21831.53
12/31/90 30070.28 22440.63
01/31/91 33038.72 23419.04
02/28/91 37119.60 25093.50
03/31/91 40428.58 25700.76
04/30/91 39724.78 25762.44
05/31/91 41881.58 26875.38
06/30/91 39993.03 25644.49
07/31/91 43531.81 26839.52
08/31/91 45707.19 27475.62
09/30/91 46628.24 27016.78
10/31/91 49700.43 27378.80
11/30/91 46985.75 26275.44
12/31/91 55236.88 29281.34
01/31/92 53424.58 28736.71
02/29/92 51091.71 29110.29
03/31/92 47974.79 28542.64
04/30/92 45256.33 29381.79
05/31/92 46188.19 29525.76
06/30/92 44407.94 29085.83
07/31/92 47079.35 30275.44
08/31/92 45809.56 29654.79
09/30/92 42638.56 30004.72
10/31/92 43949.98 30109.74
11/30/92 46357.72 31136.48
12/31/92 45606.79 31519.46
01/31/93 43157.41 31784.22
02/28/93 38552.00 32216.49
03/31/93 39615.35 32896.25
04/30/93 39600.68 32100.16
05/31/93 41184.71 32960.45
06/30/93 41038.04 33056.03
07/31/93 39703.35 32923.81
08/31/93 41118.71 34171.62
09/30/93 42402.07 33908.50
10/31/93 45555.45 34610.41
11/30/93 45401.45 34281.61
12/31/93 46708.91 34696.42
01/31/94 47633.99 35876.09
02/28/94 46481.32 34903.85
03/31/94 43449.13 33382.04
04/30/94 45192.19 33809.33
05/31/94 47744.55 34363.81
06/30/94 46986.93 33521.89
07/31/94 47928.44 34621.41
08/31/94 54217.39 36040.89
09/30/94 54607.23 35157.89
10/31/94 55364.85 35948.94
11/30/94 56563.80 34639.68
12/31/94 56731.97 35153.39
01/31/95 59736.84 36064.91
02/28/95 61002.89 37470.36
Let's say you invested $10,000 in Fidelity Select Health Care Portfolio on
February 28, 1985 and paid a 3% sales charge. By February 28, 1995, your
investment would have grown to $61,003 - a 510.03% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $37,470 over
the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Schering-Plough Corp. 8.1
Pfizer, Inc. 7.8
Johnson & Johnson 7.0
Bristol-Myers Squibb Co. 5.9
American Home Products Corp. 5.5
Allergan, Inc. 4.2
St. Jude Medical, Inc. 3.6
Bergen Brunswig Corp. Class A 3.5
Boston Scientific Corp. 3.2
Rhone Poulenc Rorer, Inc. 3.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 26.3
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 4.0
Row: 1, Col: 4, Value: 11.0
Row: 1, Col: 5, Value: 16.1
Row: 1, Col: 6, Value: 39.0
Drugs 39.0%
Medical Supplies &
Appliances 16.1%
Medical Technology 11.0%
Drug Distributors - Wholesale 4.0%
Pharmaceutical Preparations 3.6%
All Others 26.3%*
* INCLUDES SHORT-TERM INVESTMENTS
HEALTH CARE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Karen Firestone,
Portfolio Manager of Fidelity Select
Health Care Portfolio
Q. HOW HAS THE FUND PERFORMED, KAREN?
A. Very well. For the year ended February 28, 1995, the fund had a total
return of 31.24%. That far outpaced the S&P 500, which returned 7.36% for
the same time period.
Q. WHY HAS THE FUND'S PERFORMANCE BEEN SO GOOD?
A. In February I took over the fund from Charles Mangum. He had invested
heavily in drug stocks and medical device companies - both of which enjoyed
pretty good runs over the past six months. Consolidation within the
industry has helped drug stocks rally as companies such as Syntex and
American Cyanamid were acquired during the past 12 months. Despite all the
merger activity, I still believe drug stocks are reasonably valued. We've
also seen the same trend within the medical device industry. As hospitals
consolidate nationwide, the largest companies in the medical device sector
have been getting even larger as they acquire the smaller players and the
number of suppliers drops.
Q. SPECIFICALLY, WHICH COMPANIES HAVE PERFORMED WELL?
A. The fund's large positions in Pfizer - a pharmaceutical company - and
Johnson & Johnson did quite well during the period. During the past six
months, Pfizer's stock price climbed from $61 a share to $83 a share
between September and February. I added to the fund's J&J position as
earnings growth continued to exceed expectations. Since the end of August,
the stock has moved from $50 to $56. On the medical device side, Becton
Dickinson has also enjoyed a healthy increase in its stock price.
Q. SCHERING-PLOUGH REMAINS THE FUND'S LARGEST HOLDING, AND IN FACT YOU'VE
ADDED TO THE POSITION DURING THE PAST SIX MONTHS. WHAT'S THE STORY THERE?
A. I think Schering-Plough has been one of the best financially managed
companies in the drug industry. The company has consistently grown earnings
by about 15% to 20% per year for the past decade and the stock moved from
about $70 in September to about $78 in late February. When the stock price
occasionally dips - as it did during the period - I usually take the
opportunity to buy more.
Q. THERE ARE ALSO SOME NEW NAMES IN THE FUND'S TOP 10 HOLDINGS . . .
A. That's right. I've added to the fund's positions in Bergen Brunswig and
Boston Scientific. Bergen Brunswig supplies pharmaceuticals and health care
products to hospitals and pharmacies. The company recently cut costs and
accelerated earnings, making it a possible take-over candidate in the
current consolidation environment. Boston Scientific, which manufactures
and sells medical devices worldwide, announced two major acquisitions
during the period and its stock has nearly doubled. The company has been
growing revenues by 15% to 20% per year and has had enormous free cash
flow. In addition, Boston Scientific recently was added to the S&P 500,
which increases demand for the stock by mutual funds that track the index.
Q. THOUGH IT'S BEEN A GREAT YEAR, WHICH INVESTMENTS WERE DISAPPOINTING?
A. Well, the fund's position in Warner Lambert - its second largest holding
six months ago - has been significantly reduced. The company posted a
series of earnings disappointments, and while I still believe in the asset
value of the company, I've decided to allocate the fund's assets elsewhere.
I've purposely stayed away from investing in health maintenance
organizations, or HMOs, because I think their profit margins will not be
sustainable over time. That said, I regret missing out on some of the
recent activity in HMO's, such as Oxford Health Plans, whose stocks have
risen recently.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. On a broad level, the perceived slowdown of the U.S. economy makes these
stocks - with growth rates of 10% to 15% - look more attractive relative to
some cyclical, or economically sensitive, stocks that have begun to post
more modest returns than they had during the past year or so. I expect
these drug and medical device stocks to continue to be good performers. I
expect the strongest companies to continue to stay strong, and the trend of
consolidation to continue. Though the extraordinarily strong performance
we've seen during the past six to 12 months is not likely to be sustainable
for a long period, I think the stocks in the fund should stay relatively
strong.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1995, more than
$943 million
MANAGER: Karen Firestone, since February
1995; manager Fidelity Select Biotechnology
Portfolio since 1992; manager, Fidelity Select
Air Transportation portfolio, 1987 - 1992;
Fidelity Select Leisure Portfolio, 1989 - 1992;
joined Fidelity in 1983
(checkmark)
HEALTH CARE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 80.8%
SHARES VALUE (NOTE 1)
DRUGS & PHARMACEUTICALS - 45.4%
BIOTECHNOLOGY - 2.7%
Biogen, Inc. (a) 20,000 $ 825,000 09059710
Cephalon, Inc. (a) 49,900 405,438 15670810
COR Therapeutics, Inc. (a) 87,100 1,175,850 21775310
Genentech, Inc. (a) 324,700 16,316,175 36871020
Genetics Institute, Inc.
(depositary share) (a) 72,000 2,592,000 37185530
Genzyme Corp. 140,000 5,425,000 37291710
Genzyme Corp.-Tissue Repair (a) 9,450 37,800 37291740
North American Biologicals, Inc. (a) 52,000 442,000 65675510
27,219,263
DRUGS - 39.0%
ALZA Corp. Class A (a) 395,200 8,990,800 02261510
Allergan, Inc. 1,429,400 41,273,925 01849010
American Home Products Corp. 762,600 54,525,900 02660910
Astra A Free 5,000 125,867 04632292
Bristol-Myers Squibb Co. 941,100 58,348,200 11012210
Elan Corp. PLC:
ADR (a) 682,050 24,042,263 28413120
unit (Therapeutic Systems, Inc.
(common & 1 ADR warrant) (a) 56,806 1,576,367 28413140
Pfizer, Inc. 936,800 77,520,200 71708110
Pharmacia AB A Free Shares 461,000 8,468,441 71713093
Roche Holdings Ltd.
(participation certificates) 2,000 11,058,158 77157092
Schering AG 11,100 8,465,812 80658510
Schering-Plough Corp. 1,019,200 79,879,800 80660510
Teva Pharmaceutical Industries Ltd. ADR 90,000 2,334,375 88162420
Vertex Pharmaceuticals, Inc. (a) 23,900 388,375 92532F10
Warner-Lambert Co. 115,900 8,851,863 93448810
385,850,346
IN VITRO, IN VIVO DIAGNOSTIC SUBSTANCE - 0.1%
Igen, Inc. (a) 174,000 978,750 44953610
PHARMACEUTICAL PREPARATIONS - 3.6%
Immunex Corp. (a) 165,300 2,768,775 45252810
Ligand Pharmaceuticals, Inc. Class B (a) 232,800 1,600,500 53220K20
Rhone Poulenc Rorer, Inc. 754,500 30,745,875 76242T10
Zeneca Group PLC sponsored ADR 3,000 124,125 98934D10
35,239,275
TOTAL DRUGS & PHARMACEUTICALS 449,287,634
MEDICAL EQUIPMENT & SUPPLIES - 31.0%
DRUG DISTRIBUTORS - WHOLESALE - 4.0%
Bergen Brunswig Corp. Class A 1,275,490 34,757,103 08373910
Cardinal Health, Inc. 97,666 4,834,467 14149Y10
39,591,570
MEDICAL, DENTAL, HOSPITAL EQUIPMENT - WHOLESALE - 0.3%
Sterile Concepts Holdings 202,200 3,336,300 85915P10
MEDICAL SUPPLIES & APPLIANCES - 16.1%
Abbott Laboratories 85,000 3,017,500 00282410
Baxter International, Inc. 673,000 20,947,125 07181310
Becton, Dickinson & Co. 585,300 30,728,250 07588710
Boston Scientific Corp. (a) 1,478,668 31,976,196 10113710
Healthdyne, Inc. (a) 258,200 2,452,900 42220310
Johnson & Johnson 1,229,600 69,779,800 47816010
Molecular Dynamics, Inc. (a) 25,000 153,125 60851410
Orthofix International (a) 50,000 712,500 68799992
159,767,396
SHARES VALUE (NOTE 1)
MEDICAL TECHNOLOGY - 10.0%
AMSCO International, Inc. (a) 210,800 $ 2,898,500 03216110
Advanced Medical, Inc. (a) 198,373 619,916
Advanced Technology Laboratories,
Inc. (a) 484,400 7,508,200 00755N10
Beckman Instruments, Inc. (a) 454,000 13,847,000 07581610
Gish Biomedical, Inc. (a) 141,700 921,050 37636010
Haemonetics Corp. (a) 220,000 3,492,500 40502410
Mentor Corp. 166,900 4,047,323 58718810
Nellcor, Inc. (a) 371,400 12,627,600 64027510
St. Jude Medical, Inc. 974,600 35,329,250 79084910
Spacelabs Medical, Inc. (b) 574,300 13,926,775 84624710
Vital Signs, Inc. 234,400 3,281,600 92846910
98,499,714
X-RAY ELECTRO-MEDICAL APPARATUS - 0.6%
American Medical Electronics, Inc. (a) 20,900 135,850 02742510
Circon Corp. (a) 45,700 788,325 17273610
Marquette Electronics, Inc. Class A (a) 25,500 567,375 57147410
Protocol Systems, Inc. (a) (b) 466,500 4,081,875 74371R10
5,573,425
TOTAL MEDICAL EQUIPMENT & SUPPLIES 306,768,405
MEDICAL FACILITIES MANAGEMENT - 4.4%
HEALTH SERVICES - 0.0%
Healthwise America, Inc. (a) 3,960 127,710 42221L10
HOME HEALTH CARE AGENCIES - 2.0%
Abbey Healthcare Group, Inc. (a) 450,500 12,782,938 00278610
Coram Healthcare Corp. (a) 269,334 6,329,349 21810310
19,112,287
HOSPITALS - 1.8%
Columbia/HCA Healthcare Corp. 421,705 17,448,044 19767710
NovaCare, Inc. (a) 50,000 431,250 66993010
17,879,294
HMOS & OUTPATIENT CARE - 0.0%
FHP International Corp. (a) 5,000 134,375 30242610
MEDICAL SERVICES - 0.5%
Surgical Care Affiliates, Inc. 202,500 4,252,500 86881810
Syncor International Corp. (a) 107,500 806,250 87157J10
5,058,750
SKILLED NURSING CARE FACILITIES - 0.1%
Theratx, Inc. (a) 55,000 1,093,125 88338410
TOTAL MEDICAL FACILITIES MANAGEMENT 43,405,541
SERVICES - 0.0%
PERSONNEL SUPPLY SERVICES - 0.0%
CDI Corp. (a) 1,600 35,200 12507110
TOTAL COMMON STOCKS
(Cost $693,287,501) 799,496,780
CONVERTIBLE PREFERRED STOCKS - 0.8%
MEDICAL EQUIPMENT & SUPPLIES - 0.8%
MEDICAL TECHNOLOGY - 0.8%
U.S. Surgical Corp. $2.20 (c)
(Cost $7,710,166) 332,800 8,486,400 91270720
CORPORATE BONDS - 0.2%
PRINCIPAL VALUE (NOTE 1)
AMOUNT
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
MEDICAL TECHNOLOGY - 0.2%
Advanced Medical 15%, 7/15/99 P/P
(Cost $1,496,918) $ 2,090,000 $ 2,006,400 00754CAA
REPURCHASE AGREEMENTS - 18.2%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $179,893,377 179,863,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $882,357,585) $ 989,852,580
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Protocol Systems. Inc. (a) $ 968,087 $ - $ - $ 4,081,875
Spacelabs Medical, Inc. (a) $ 1,041,195 $ - $ - $ 13,926,775
Totals $ 2,009,282 $ - $ - $ 18,008,650
(a) Non-income producing
3. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of this security amounted to $8,486,400 or 0.9% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $1,040,973,872 and $883,189,848, respectively (see Note 4 of
Notes to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $272,806 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $39,320,375 and $40,776,000, respectively (see Note
7 of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $885,130,966. Net unrealized appreciation
aggregated $104,721,614, of which $109,246,223 related to appreciated
investment securities and $4,524,609 related to depreciated investment
securities.
The fund hereby designates $11,010,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
HEALTH CARE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $179,863,000) (cost $882,357,585) - $ 989,852,580
See accompanying schedule
Cash 141
Receivable for investments sold 2,122,729
Receivable for fund shares sold 12,406,769
Dividends receivable 2,952,349
Interest receivable 37,881
Redemption fees receivable 857
Other receivables 292,319
TOTAL ASSETS 1,007,665,625
LIABILITIES
Payable for investments purchased $ 1,112,204
Payable for fund shares redeemed 5,154,161
Accrued management fee 469,451
Other payables and accrued expenses 17,012,837
Collateral on securities loaned, 40,776,000
at value
TOTAL LIABILITIES 64,524,653
NET ASSETS $ 943,140,972
Net Assets consist of:
Paid in capital $ 820,792,838
Undistributed net investment income 2,008,371
Accumulated undistributed net realized gain (loss) on investments 12,844,768
Net unrealized appreciation (depreciation) on investments 107,494,995
NET ASSETS, for 12,389,117 shares outstanding $ 943,140,972
NET ASSET VALUE and redemption price per share ($943,140,972 (divided by) 12,389,117 shares) $76.13
Maximum offering price per share (100/97.00 of $76.13) $78.48
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 11,784,880
Dividends
Interest (including security lending fees of $338,591) 3,914,312
TOTAL INCOME 15,699,192
EXPENSES
Management fee $ 3,999,219
Transfer agent 4,301,599
Fees
Redemption fees (208,126
)
Accounting and security lending fees 593,155
Non-interested trustees' compensation 12,084
Custodian fees and expenses 50,733
Registration fees 80,573
Audit 57,745
Legal 9,068
Reports to shareholders 26,974
Miscellaneous 4,857
Total expenses before reductions 8,927,881
Expense reductions (172,406 8,755,475
)
NET INVESTMENT INCOME 6,943,717
REALIZED AND UNREALIZED GAIN (LOSS) 79,587,152
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on investment securities 91,979,090
NET GAIN (LOSS) 171,566,242
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 178,509,959
OTHER INFORMATION $1,959,254
Sales Charges Paid to FDC
Deferred sales charges withheld $69,232
by FDC
Exchange fees withheld by FSC $122,790
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 6,943,717 $ 1,451,437
Net investment income
Net realized gain (loss) 79,587,152 (3,984,876
)
Change in net unrealized appreciation (depreciation) 91,979,090 103,530,466
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 178,509,959 100,997,027
Distributions to shareholders: (5,882,332 (631,397
From net investment income ) )
From net realized gain (56,259,930 -
)
TOTAL DISTRIBUTIONS (62,142,262 (631,397
) )
Share transactions 608,744,670 255,996,151
Net proceeds from sales of shares
Reinvestment of distributions 60,781,787 614,017
Cost of shares redeemed (366,138,010 (370,922,213
) )
Paid in capital portion of redemption fees 495,264 469,371
Net increase (decrease) in net assets resulting from share transactions 303,883,711 (113,842,674
)
TOTAL INCREASE (DECREASE) IN NET ASSETS 420,251,408 (13,477,044
)
NET ASSETS
Beginning of period 522,889,564 536,366,608
End of period (including undistributed net investment income of $2,008,371 and $820,040,
respectively) $ 943,140,972 $ 522,889,564
OTHER INFORMATION
Shares
Sold 8,512,762 4,521,405
Issued in reinvestment of distributions 871,512 10,053
Redeemed (5,254,899 (6,474,354
) )
Net increase (decrease) 4,129,375 (1,942,896
)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 63.31 $ 52.57 $ 70.42 $ 69.99 $ 46.15
Income from Investment Operations
Net investment income (loss) .75 .15 .13 (.02) .73 E
Net realized and unrealized gain (loss) 18.38 10.61 (9.34) 9.47 28.70
Total from investment operations 19.13 10.76 (9.21) 9.45 29.43
Less Distributions (.62) (.07) (.16) (.34) (.20)
From net investment income
From net realized gain (5.74) - (8.51) (8.81) (5.67)
Total distributions (6.36) (.07) (8.67) (9.15) (5.87)
Redemption fees added to paid in capital .05 .05 .03 .13 .28
Net asset value, end of period $ 76.13 $ 63.31 $ 52.57 $ 70.42 $ 69.99
TOTAL RETURN B, C 31.24% 20.57% (14.81)% 13.92% 69.32%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 943,141 $ 522,890 $ 536,367 $ 838,814 $ 624,018
Ratio of expenses to average net assets 1.36% 1.55% 1.46% A 1.44% 1.53%
Ratio of expenses to average net assets before expense reductions 1.39% 1.59% 1.46% A 1.44% 1.53%
Ratio of net investment income (loss) to average net assets 1.08% .26% .24% A (.02)% 1.28%
Portfolio turnover rate 151% 213% 112% A 154% 159%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.55 PER SHARE.
MEDICAL DELIVERY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
MEDICAL DELIVERY 19.63% 175.17% 216.92%
MEDICAL DELIVERY
(INCL. 3% SALES CHARGE) 16.04% 166.91% 207.41%
S&P 500 7.36% 71.20% 158.12%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on June 30, 1986. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
MEDICAL DELIVERY 19.63% 22.44% 14.22%
MEDICAL DELIVERY
(INCL. 3% SALES CHARGE) 16.04% 21.70% 13.82%
S&P 500 7.36% 11.35% 11.55%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Medical DelivStandard & Poor's 50
06/30/86 9700.00 10000.00
07/31/86 9011.30 9488.77
08/31/86 9108.30 10192.84
09/30/86 8380.80 9349.89
10/31/86 9040.40 9889.38
11/30/86 8506.90 10129.69
12/31/86 7944.30 9871.39
01/31/87 8342.00 11201.06
02/28/87 8953.10 11643.50
03/31/87 9379.90 11980.00
04/30/87 8409.90 11873.38
05/31/87 8671.80 11976.68
06/30/87 9263.50 12581.50
07/31/87 9661.20 13219.38
08/31/87 9438.10 13712.46
09/30/87 9292.60 13412.16
10/31/87 6644.50 10523.18
11/30/87 6246.80 9656.07
12/31/87 6984.29 10390.90
01/31/88 7025.49 10828.35
02/29/88 7386.04 11332.96
03/31/88 7581.76 10982.77
04/30/88 7643.57 11104.68
05/31/88 7519.96 11201.29
06/30/88 7756.89 11715.43
07/31/88 7674.48 11670.91
08/31/88 7458.15 11274.10
09/30/88 7880.50 11754.37
10/31/88 8086.53 12081.14
11/30/88 7829.00 11908.38
12/31/88 8086.53 12116.78
01/31/89 8684.00 13003.73
02/28/89 9003.34 12679.94
03/31/89 9497.81 12975.38
04/30/89 10146.79 13648.80
05/31/89 10672.16 14201.58
06/30/89 10548.09 14120.63
07/31/89 11745.33 15395.72
08/31/89 12292.35 15697.48
09/30/89 12632.94 15633.12
10/31/89 12209.78 15270.43
11/30/89 12777.44 15581.95
12/31/89 12778.17 15955.91
01/31/90 10896.86 14885.27
02/28/90 11171.65 15077.29
03/31/90 11689.55 15476.84
04/30/90 11805.81 15089.92
05/31/90 13475.74 16561.19
06/30/90 14120.46 16448.57
07/31/90 14173.31 16395.93
08/31/90 13042.41 14913.74
09/30/90 12175.73 14187.44
10/31/90 12027.76 14126.44
11/30/90 13697.70 15039.00
12/31/90 14856.15 15458.59
01/31/91 17250.55 16132.59
02/28/91 18317.15 17286.07
03/31/91 21038.06 17704.39
04/30/91 20406.81 17746.88
05/31/91 22093.77 18513.55
06/30/91 20232.49 17665.63
07/31/91 22262.54 18488.84
08/31/91 22523.38 18927.03
09/30/91 22727.52 18610.95
10/31/91 23226.53 18860.33
11/30/91 22580.09 18100.26
12/31/91 26417.99 20170.93
01/31/92 26441.20 19795.75
02/29/92 25419.77 20053.10
03/31/92 23736.72 19662.06
04/30/92 22796.54 20240.13
05/31/92 22564.40 20339.30
06/30/92 21376.21 20036.25
07/31/92 22592.64 20855.73
08/31/92 22567.30 20428.19
09/30/92 19919.03 20669.24
10/31/92 20907.38 20741.58
11/30/92 22960.11 21448.87
12/31/92 22934.76 21712.69
01/31/93 21769.02 21895.08
02/28/93 18322.47 22192.85
03/31/93 18727.94 22661.12
04/30/93 18499.86 22112.72
05/31/93 19070.07 22705.34
06/30/93 19260.13 22771.19
07/31/93 19741.64 22680.10
08/31/93 19678.28 23539.68
09/30/93 21300.19 23358.43
10/31/93 22301.21 23841.94
11/30/93 22668.67 23615.45
12/31/93 24201.88 23901.19
01/31/94 25557.69 24713.83
02/28/94 25697.07 24044.09
03/31/94 24417.29 22995.77
04/30/94 25202.90 23290.11
05/31/94 26051.86 23672.07
06/30/94 24442.63 23092.10
07/31/94 25532.35 23849.53
08/31/94 28117.26 24827.36
09/30/94 29118.28 24219.09
10/31/94 30068.62 24764.01
11/30/94 28776.16 23862.11
12/31/94 29003.56 24215.98
01/31/95 30276.69 24843.91
02/28/95 30740.85 25812.07
Let's say you invested $10,000 in Fidelity Select Medical Delivery
Portfolio on June 30, 1986, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $30,741 -
a 207.41% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $25,812 over the same period - a 158.12% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Columbia/HCA Healthcare Corp. 8.6
Health Management Associates, Inc. Class A 7.7
U.S. Healthcare, Inc. 7.2
Lincare Holdings, Inc. 6.9
Homedco Group, Inc. 5.3
Baxter International, Inc. 5.0
United HealthCare Corp. 4.8
Universal Health Services, Inc. 3.4
Community Psychiatric Centers 3.1
Coventry Corp. 2.7
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 35.4
Row: 1, Col: 2, Value: 5.2
Row: 1, Col: 3, Value: 6.9
Row: 1, Col: 4, Value: 7.9
Row: 1, Col: 5, Value: 17.4
Row: 1, Col: 6, Value: 27.2
Hospitals 27.2%
HMO's & Outpatient Care 17.4%
Medical Services 7.9%
Home Health Care Agencies 6.9%
Medical Supplies &
Appliances 5.2%
All Others 35.4%*
* INCLUDES SHORT-TERM INVESTMENTS
MEDICAL DELIVERY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Stephen Binder,
Portfolio Manager of Fidelity Select Medical
Delivery Portfolio
Q. STEVE, HOW DID THE FUND DO?
A. Very well. For the 12 months ended February 28, 1995, the fund returned
19.63%, outperforming the S&P 500, which returned 7.36%.
Q. WHAT'S BEHIND THIS STRONG RETURN?
A. In general, health care funds had a solid year because investors stopped
worrying about government health care reform, which could have negatively
impacted the sector. In fact, once the market realized that the Clinton
plan would definitely not pass in August 1994, health care stocks took off.
The fund also benefited from its heavy investments in HMOs, an increasingly
popular approach to controlling medical costs.
Q. HOW DID HMOS LOOK AT THE END OF THE PERIOD?
A. As of February 1995, I was less bullish on HMOs for a number of reasons.
These stocks were fairly expensive and increasingly volatile. More
importantly, I think HMOs may start to suffer from shrinking profit margins
- - the spread between the premiums they charge customers and their medical
costs. This could happen if HMOs try to gain market share too aggressively
by cutting prices.
Q. STILL, YOU HAD SEVERAL LARGE HMOS IN YOUR TOP 10 STOCKS. WHY?
A. The HMOs I've included in my top 10 stocks are very large companies
that, I think, would be the last to crack under profit margin pressures.
Both of the fund's largest HMO holdings, U.S. Healthcare and United
HealthCare, currently have very healthy profit margins, and I see them as
reasonably defensive holdings. I also think HMOs may benefit as more state
governments and the federal government try to control their health care
costs through managed care. Medicaid and Medicare HMOs have already gained
a lot of momentum, and I expect this trend to continue as Republican
legislators push for more federal and state budget cuts.
Q. HOW ABOUT HOSPITALS? WHAT PART DID THEY PLAY IN THE FUND?
A. At the end of the period, for-profit hospitals were my largest
investment. I should note that many non-profit hospitals - which describes
95% of U.S. hospitals - have been hurt by HMOs' cost-cutting measures, such
as reducing the length of hospital stays. However, large, for-profit
hospitals have been rising above these pricing constraints by consolidating
among themselves and acquiring not-for-profit hospitals.
Q. WHICH FOR-PROFIT HOSPITALS DID YOU LIKE?
A. Columbia/HCA, the fund's largest holding, is forming statewide networks
of mostly urban hospitals that can give payers, such as HMOs, pricing
discounts in exchange for an increase in the volume of patients. Another
large fund holding, Health Management Associates, buys rural hospitals at
low prices and upgrades them. This company has been very successful in
producing high profit margins over the past four years.
Q. WHAT OTHER MEDICAL DELIVERY STOCKS LOOKED GOOD?
A. Lincare and Homedco, two companies that provide respiratory therapy at
home, turned in solid results over the past year.
Q. STEVE, YOU'VE BEEN THE MANAGER OF THIS FUND SINCE THE BEGINNING OF
DECEMBER. HAVE YOU MADE ANY CHANGES TO ITS STRATEGY?
A. Some. While, I don't think the general philosophy of the fund has
changed, I do have some differing views from the previous manager. I may
tend to be a bit more skeptical about HMOs and to favor hospitals more. And
I am less likely to weight my top 10 stocks as heavily as the previous
manager.
Q. ANY REGRETS?
A. There are some stocks that I wish I had purchased, such as Omnicare, a
company that distributes pharmaceuticals to nursing home patients. Its
stock has shot up about 25% since late November 1994.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. I expect the medical delivery market to remain volatile. However, I
think the hospital sector may do well and some home service providers could
be sound performers.
FUND FACTS
START DATE: June 30, 1986
SIZE: as of February 28, 1995, more than
$299 million
MANAGER: Stephen Binder, since December
1994; manager Select Financial Services
Portfolio, November 1993 - November 1994;
Select Defense and Aerospace Portfolio,1992
- - 1994; Regional Banks Portfolio, 1990 -
1994; joined Fidelity in 1989
(checkmark)
MEDICAL DELIVERY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 82.4%
SHARES VALUE (NOTE 1)
CHEMICALS & PLASTICS - 2.5%
CHEMICALS - 2.5%
Grace (W.R.) & Co. 175,000 $ 7,874,998 38388310
DRUGS & PHARMACEUTICALS - 1.9%
DRUGS - 1.9%
Warner-Lambert Co. 80,000 6,110,000 93448810
HOME FURNISHINGS - 0.2%
FURNITURE - 0.2%
Kinetic Concepts, Inc. 65,000 503,750 49460W10
MEDICAL EQUIPMENT & SUPPLIES - 7.5%
DRUG DISTRIBUTORS - WHOLESALE - 1.4%
Bergen Brunswig Corp. Class A 139,465 3,800,421 08373910
Cardinal Health, Inc. 10,000 495,000 14149Y10
4,295,421
MEDICAL SUPPLIES & APPLIANCES - 5.2%
Baxter International, Inc. 500,200 15,568,725 07181310
Boston Scientific Corp. (a) 40,000 865,000 10113710
16,433,725
MEDICAL TECHNOLOGY - 0.4%
Beckman Instruments, Inc. 20,000 610,000 07581610
St. Jude Medical, Inc. 20,100 728,625 79084910
1,338,625
X-RAY ELECTRO-MEDICAL APPARATUS - 0.5%
Medisense, Inc. (a) 75,000 1,537,500 58496010
TOTAL MEDICAL EQUIPMENT & SUPPLIES 23,605,271
MEDICAL FACILITIES MANAGEMENT - 67.7%
HEALTH PRACTITIONERS - 0.4%
Apogee, Inc. (a) 56,500 1,158,250 03759T10
HOME HEALTH CARE AGENCIES - 6.9%
Abbey Healthcare Group, Inc. (a) 75,000 2,128,125 00278610
Coram Healthcare Corp. (a) 117,600 2,763,600 21810310
Homedco Group, Inc. (a) 369,800 16,641,000 43739A10
21,532,725
HOSPITALS - 27.2%
Columbia/HCA Healthcare Corp. 653,282 27,029,543 19767710
Community Psychiatric Centers 843,900 9,810,338 20401510
HEALTHSOUTH Rehabilitation Corp. (a) 95,100 3,827,775 42192410
Health Management Associates, Inc.
Class A (a) 901,512 24,002,757 42193310
National Medical Enterprises, Inc. (a) 373,600 5,790,800 63688610
Quorum Health Group, Inc. (a) 205,700 3,908,300 74908410
Universal Health Services, Inc. Class B (a) 426,600 10,665,000 91390310
Vencor, Inc. (a) 10,000 317,500 92260210
85,352,013
HOSPITALS, GENERAL MEDICAL - 0.4%
Ornda Healthcorp (a) 75,000 1,139,063 68685710
HMO'S & OUTPATIENT CARE - 17.4%
Coventry Corp. (a) 319,000 8,613,000 22285310
Oxford Health Plans, Inc. (a) 48,900 4,449,900 69147110
Pacificare Health Systems, Inc. Class B (a) 10,000 702,500 69511020
Sierra Health Services, Inc. (a) 107,700 3,271,388 82632210
United HealthCare Corp. 349,000 15,007,000 91058110
U.S. Healthcare, Inc. 523,700 22,519,100 91191010
54,562,888
MEDICAL SERVICES - 7.9%
Lincare Holdings, Inc. (a) 772,400 21,627,200 53279110
Medpartners, Inc. 1,000 17,500 58496210
Surgical Care Affiliates, Inc. 155,000 3,255,000 86881810
24,899,700
COMMON STOCKS - 82.4%
SHARES VALUE (NOTE 1)
MISCELLANEOUS HEALTH & ALLIED SERVICES - 0.1%
Renal Treatment Centers, Inc. (a) 20,000 $ 435,000 75967110
NURSING CARE & NURSING HOMES - 3.1%
Integrated Health Services, Inc. 159,500 6,100,875 45812C10
Manor Care, Inc. 120,000 3,555,000 56405410
9,655,875
SKILLED NURSING CARE FACILITIES - 2.9%
Multicare Companies, Inc. (a) 374,900 7,943,194 62543V10
Theratx, Inc. (a) 62,500 1,242,188 88338410
9,185,382
SPECIALTY OUTPATIENT CLINICS - 1.4%
Coastal Healthcare Group, Inc. 170,000 4,420,000 19046510
TOTAL MEDICAL FACILITIES MANAGEMENT 212,340,896
REAL ESTATE INVESTMENT TRUSTS - 2.3%
Capstone Capital Corp. (b) 375,000 6,234,375 14066R10
Meditrust (SBI) 30,600 979,200 58501T10
7,213,575
SERVICES - 0.3%
MANAGEMENT SERVICES - 0.3%
Emcare Holdings (a) 50,600 853,875 29082010
TOTAL COMMON STOCKS
(Cost $226,852,185) 258,502,365
REPURCHASE AGREEMENTS - 17.6%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $ 55,100,304 55,091,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100.0%
(Cost $281,943,185) $ 313,593,365
LEGEND
1. Non-income producing
2. A company in which the fund has ownership of at least 5% of the voting
securities is an affiliated company. A summary of the transactions during
the period in which the issuers were affiliates is as follows:
PURCHASES SALES DIVIDEND MARKET
AFFILIATE COST COST INCOME VALUE
Capstone Capital Corp. $ 87,750 $ 540,000 $ 344,250 $ 6,234,375
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $293,063,797 and $210,358,062, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $112,144 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,071,375 and $2,117,000, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $12,310,000 and $4,586,286,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $281,943,185. Net unrealized appreciation
aggregated $31,650,180, of which $36,195,249 related to appreciated
investment securities and $4,545,069 related to depreciated investment
securities.
The fund hereby designates $2,284,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
MEDICAL DELIVERY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $55,091,000) (cost $281,943,185) - See $ 313,593,365
accompanying schedule
Cash 729
Receivable for investments sold 1,863,396
Receivable for fund shares sold 2,872,170
Dividends receivable 91,150
Redemption fees receivable 1,801
Other receivables 82,791
TOTAL ASSETS 318,505,402
LIABILITIES
Payable for investments purchased $ 11,227,909
Payable for fund shares redeemed 5,228,249
Accrued management fee 151,347
Other payables and accrued expenses 211,049
Collateral on securities loaned, at value 2,117,000
TOTAL LIABILITIES 18,935,554
NET ASSETS $ 299,569,848
Net Assets consist of:
Paid in capital $ 264,915,352
Accumulated undistributed 3,004,316
net realized gain (loss)
on investments
Net unrealized appreciation (depreciation) on investments 31,650,180
NET ASSETS, for 12,924,060 shares outstanding $ 299,569,848
NET ASSET VALUE and redemption price per share ($299,569,848 (divided by) 12,924,060 shares) $23.18
Maximum offering price per share (100/97.00 of $23.18) $23.90
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 1,422,660
Dividends (including $344,250 received from affiliated issuers)
Interest (including security lending fees of $24,214) 2,295,318
TOTAL INCOME 3,717,978
EXPENSES
Management fee $ 1,329,801
Transfer agent 1,583,373
Fees
Redemption fees (142,228
)
Accounting and security lending fees 217,243
Non-interested trustees' compensation 2,741
Custodian fees and expenses 18,240
Registration fees 104,421
Audit 28,662
Legal 2,414
Interest 3,624
Reports to shareholders 7,722
Miscellaneous 1,444
Total expenses before reductions 3,157,457
Expense reductions (60,316 3,097,141
)
NET INVESTMENT INCOME 620,837
REALIZED AND UNREALIZED GAIN (LOSS) 25,519,856
Net realized gain (loss) on investment securities (including realized gain (loss) of $(60,273) on sales of
investment in affiliated issuers)
Change in net unrealized appreciation (depreciation) on investment securities 5,905,629
NET GAIN (LOSS) 31,425,485
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 32,046,322
OTHER INFORMATION $1,314,731
Sales Charges Paid to FDC
Deferred sales charges withheld $8,345
by FDC
Exchange fees withheld by FSC $113,445
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 620,837 $ (606,248
Net investment income (loss) )
Net realized gain (loss) 25,519,856 (9,573,815
)
Change in net unrealized appreciation (depreciation) 5,905,629 46,689,562
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 32,046,322 36,509,499
Distributions to shareholders: (620,837 -
From net investment income )
From net realized gain (9,893,316 -
)
TOTAL DISTRIBUTIONS (10,514,153 -
)
Share transactions 408,339,151 293,157,307
Net proceeds from sales of shares
Reinvestment of distributions 10,314,005 -
Cost of shares redeemed (329,680,344 (213,446,953
) )
Paid in capital portion of redemption fees 512,240 523,366
Net increase (decrease) in net assets resulting from share transactions 89,485,052 80,233,720
TOTAL INCREASE (DECREASE) IN NET ASSETS 111,017,221 116,743,219
NET ASSETS
Beginning of period 188,552,627 71,809,408
End of period $ 299,569,848 $ 188,552,627
OTHER INFORMATION
Shares
Sold 18,773,290 17,052,395
Issued in reinvestment of distributions 506,086 -
Redeemed (15,651,245 (12,723,955
) )
Net increase (decrease) 3,628,131 4,328,440
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.28 $ 14.46 $ 19.64 $ 18.75 $ 11.17
Income from Investment Operations
Net investment income (loss) .06 (.10) (.13) (.15) (.01)
Net realized and unrealized gain (loss) 3.74 5.84 (3.56) 2.16 7.76
Total from investment operations 3.80 5.74 (3.69) 2.01 7.75
Less Distributions (.06) E - - - -
From net investment income
From net realized gain (.89) E - (1.55) (1.24) (.39)
Total distributions (.95) - (1.55) (1.24) (.39)
Redemption fees added to paid in capital .05 .08 .06 .12 .22
Net asset value, end of period $ 23.18 $ 20.28 $ 14.46 $ 19.64 $ 18.75
TOTAL RETURN B, C 19.63% 40.25% (19.63)% 11.71% 72.85%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 299,570 $ 188,553 $ 71,809 $ 129,361 $ 131,622
Ratio of expenses to average net assets 1.45% 1.79% 1.77% a 1.69% 1.94%
Ratio of expenses to average net assets before expense reductions 1.48% 1.82% 1.77% a 1.69% 1.94%
Ratio of net investment income (loss) to average net assets .29% (.57)% (.89)% (.71)% (.07)%
a
Portfolio turnover rate 123% 164% 155% a 181% 165%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
COMPUTERS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
COMPUTERS 13.51% 183.53% 256.75%
COMPUTERS
(INCL. 3% SALES CHARGE) 10.10% 175.02% 246.05%
S&P 500 7.36% 71.20% 246.77%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on July 29, 1985. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
COMPUTERS 13.51% 23.17% 14.17%
COMPUTERS
(INCL. 3% SALES CHARGE) 10.10% 22.43% 13.81%
S&P 500 7.36% 11.35% 13.84%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Computer (007Standard & Poor's 50
07/29/85 9700.00 10000.00
07/31/85 9515.70 9926.31
08/31/85 9312.00 9841.93
09/30/85 8904.60 9533.88
10/31/85 9438.10 9974.35
11/30/85 10476.00 10658.59
12/31/85 11019.20 11174.46
01/31/86 11145.30 11237.04
02/28/86 11727.30 12077.57
03/31/86 11727.30 12751.50
04/30/86 12901.00 12607.41
05/31/86 13405.40 13278.12
06/30/86 12513.00 13502.52
07/31/86 10571.75 12747.73
08/31/86 11603.62 13693.61
09/30/86 10708.04 12561.15
10/31/86 11759.37 13285.93
11/30/86 11837.25 13608.78
12/31/86 11885.92 13261.75
01/31/87 14251.43 15048.11
02/28/87 15672.67 15642.51
03/31/87 15779.75 16094.58
04/30/87 16159.40 15951.34
05/31/87 16091.26 16090.11
06/30/87 15760.29 16902.66
07/31/87 16023.12 17759.63
08/31/87 17123.13 18422.06
09/30/87 17269.14 18018.62
10/31/87 11175.30 14137.41
11/30/87 9666.44 12972.49
12/31/87 11131.17 13959.69
01/31/88 10549.01 14547.40
02/29/88 11502.54 15225.31
03/31/88 11321.87 14754.84
04/30/88 11904.02 14918.62
05/31/88 11552.73 15048.41
06/30/88 12646.77 15739.14
07/31/88 11693.24 15679.33
08/31/88 10579.12 15146.23
09/30/88 10860.16 15791.46
10/31/88 9986.93 16230.46
11/30/88 9926.71 15998.37
12/31/88 10569.09 16278.34
01/31/89 11191.39 17469.91
02/28/89 10990.65 17034.91
03/31/89 10468.72 17431.83
04/30/89 11643.06 18336.54
05/31/89 12676.88 19079.17
06/30/89 11171.31 18970.42
07/31/89 11372.06 20683.44
08/31/89 11542.69 21088.84
09/30/89 11813.69 21002.38
10/31/89 11422.24 20515.12
11/30/89 11171.31 20933.63
12/31/89 11291.76 21436.04
01/31/90 11191.39 19997.68
02/28/90 12205.14 20255.65
03/31/90 13078.37 20792.42
04/30/90 12727.07 20272.61
05/31/90 14383.19 22249.19
06/30/90 14644.16 22097.90
07/31/90 13600.30 22027.18
08/31/90 11442.32 20035.93
09/30/90 10689.53 19060.18
10/31/90 11091.02 18978.22
11/30/90 12917.77 20204.21
12/31/90 13370.20 20767.91
01/31/91 15649.21 21673.39
02/28/91 16662.11 23223.04
03/31/91 17978.87 23785.03
04/30/91 16814.04 23842.12
05/31/91 17664.87 24872.10
06/30/91 15259.51 23732.96
07/31/91 16792.77 24838.91
08/31/91 17835.80 25427.59
09/30/91 16897.07 25002.95
10/31/91 16563.30 25337.99
11/30/91 15426.40 24316.87
12/31/91 17481.17 27098.72
01/31/92 19306.47 26594.68
02/29/92 20631.11 26940.42
03/31/92 19003.99 26415.08
04/30/92 18388.60 27191.68
05/31/92 18618.07 27324.92
06/30/92 16824.06 26917.78
07/31/92 17648.05 28018.72
08/31/92 16636.31 27444.33
09/30/92 17460.31 27768.18
10/31/92 18837.10 27865.36
11/30/92 20005.30 28815.57
12/31/92 21319.51 29170.00
01/31/93 22560.72 29415.03
02/28/93 21017.03 29815.08
03/31/93 21434.25 30444.17
04/30/93 20825.49 29707.43
05/31/93 23265.47 30503.58
06/30/93 22334.43 30592.05
07/31/93 23265.47 30469.68
08/31/93 24645.99 31624.48
09/30/93 25341.60 31380.97
10/31/93 25341.60 32030.56
11/30/93 26422.47 31726.27
12/31/93 27474.01 32110.15
01/31/94 29245.43 33201.90
02/28/94 30486.56 32302.13
03/31/94 30170.64 30893.75
04/30/94 29978.82 31289.19
05/31/94 29956.26 31802.34
06/30/94 27496.57 31023.18
07/31/94 28365.36 32040.74
08/31/94 31761.53 33354.41
09/30/94 31535.87 32537.23
10/31/94 32720.58 33269.31
11/30/94 32912.39 32057.65
12/31/94 33092.92 32533.06
01/31/95 32077.46 33376.64
02/28/95 34605.00 34677.33
Let's say you invested $10,000 in Fidelity Select Computers Portfolio on
July 29, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $34,605 - a 246.05%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $34,677 over the same period - a 246.77% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Micron Technology, Inc. 9.0
Compaq Computer Corp. 8.5
International Business Machines Corp. 5.2
Digital Equipment Corp. 4.4
Sun Microsystems, Inc. 3.3
LSI Logic Corp. 3.1
Texas Instruments, Inc. 2.9
Amdahl Corp. 2.5
Xilinx, Inc. 2.2
Data General Corp. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 34.2
Row: 1, Col: 2, Value: 4.6
Row: 1, Col: 3, Value: 6.7
Row: 1, Col: 4, Value: 7.7
Row: 1, Col: 5, Value: 15.5
Row: 1, Col: 6, Value: 31.3
Semiconductors 31.3%
Mini & Micro Computers 15.5%
Mainframe Computers 7.7%
Prepackaged Computer
Software 6.7%
Semiconductor Capital
Equipment 4.6%
All Others 34.2%*
* INCLUDES SHORT-TERM INVESTMENTS
COMPUTERS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of Fidelity Select Computers Portfolio
Q. HOW DID THE FUND DO, HARRY?
A. Quite well. The fund had a total return of 13.51% for the 12 months
ended February 28, 1995. That topped the S&P 500, which had a total return
of 7.36% during the same period.
Q. WHAT CONTRIBUTED TO THE FUND'S SUCCESS?
A. In short, very strong earnings growth among its companies. Christmas
1994 marked the second strong holiday season in a row for the personal
computer industry. And, so far, there has been no post-Christmas let-up in
sales. There seems to be a "keep up with the Joneses" attitude in America's
neighborhoods regarding computers: when one person buys one, others usually
follow. And once the PC is purchased, people usually add accessories -
printers, software and the like. In addition, there have been some unique
business dynamics in the marketplace recently that have benefited the fund.
Q. CAN YOU EXPLAIN?
A. Sure. Back in 1992, Compaq Computer triggered a price war that changed
the industry. During that year, the average selling price of PCs fell
roughly 10%, but the boom in orders spurred by lower prices more than made
up for the corresponding loss in revenues. Selling prices then remained
relatively flat in 1993 and early 1994. Lately, though, prices have begun
to rise, while demand has stayed very strong. That has resulted in a bigger
pie to split among companies whose products are used to build a computer -
mainly, makers of microprocessors, memory chips and computer hardware. So
far there's been a good balance in earnings growth among each of these
groups, which has helped to boost stock prices.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Micron Technology - the fund's largest investment on February 28, 1995 -
has done extremely well. The company is one of the few manufacturers of
memory chips known as DRAMS. Micron has been operating at full capacity for
some time now, and demand remains strong. In addition, the stocks of
semiconductor manufacturers such as LSI Logic and Intel have risen, again
thanks to strong demand. Intel had a brief public relations problem
surrounding a flaw in its flagship Pentium microprocessor. But the Pentium
has gained wider acceptance than many analysts thought possible, and I
think the company's recent troubles are behind it.
Q. WHAT ABOUT THE PC MANUFACTURERS, SUCH AS COMPAQ?
A. Compaq's stock has languished recently due to concerns surrounding the
launch of a new line of products. But I'm a long-term believer in the
company. Although it's the PC industry leader, Compaq still only has a 14%
worldwide market share. In most consumer product industries, whether it's
autos or washing machines, the leader usually ends up with a 30% market
share or more. As they increase their dominance, companies often acquire
greater economic advantages, and are able to spend more money on product
research and development. I think Compaq has the opportunity to become a
dominant market leader.
Q. DID THE STRENGTH OF PC-RELATED STOCKS COME AT THE EXPENSE
OF MAINFRAME COMPUTER MANUFACTURERS?
A. Not at all. IBM's stock has risen more than 40% over the past year on
the strength of improving profit margins. Although the PC side of IBM's
business is still struggling, revenues from the mainframe side are
increasing. And the company's effective cost cutting has been the kicker
for profits. Amdahl also has done well in the mainframe arena. With demand
strong, the company has been able to increase revenues and earnings.
Q. THERE MUST HAVE BEEN A FEW DISAPPOINTMENTS . . .
A. There were. The earnings of computer distributors such as Merisel and
Tech Data suffered for a variety of reasons. In addition, some of the
fund's overseas investments haven't performed as well as I had hoped over
the past six months. Taiwanese semiconductor manufacturer United Micro and
PC maker Acer are fast-growing companies, but their stocks have fallen
recently. Investors fled smaller emerging markets such as Taiwan in the
wake of peso troubles in Mexico.
Q. WHAT DO YOU SEE LOOKING OUT SIX MONTHS?
A. It's hard not to be optimistic. Over the past few years, companies that
sell computers and related products generally have been fighting declining
profit margins by lowering internal costs. But now costs are low, demand is
strong and margins are improving. The recent success of these stocks is
reason for caution, though. They're not as cheap as they were six months
ago, and a downturn in the overall market would probably spell trouble for
the fund.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1995, more than
$215 million
MANAGER: Harry Lange, since 1992; manager,
Fidelity Select Electronics Portfolio, since
January 1994; Fidelity Select Technology
Portfolio, since 1993; research director, Fidelity
Investments Far East, 1988-1992; manager,
Fidelity Select Capital Goods and Automation
and Machinery Portfolios, 1988; joined Fidelity
in 1987
(checkmark)
COMPUTERS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.8%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 3.5%
DATACOMMUNICATIONS EQUIPMENT - 0.7%
Cisco Systems, Inc. (a) 20,000 $ 675,000 17275R10
3Com Corp. (a) 10,000 521,250 88553510
US Robotics, Inc. (a) 8,032 433,721 91246610
1,629,971
TELEPHONE EQUIPMENT - 2.8%
DSC Communications Corp. (a) 11,000 396,000 23331110
Global Village Communication (a) 20,000 240,000 37935Q10
Natural Microsystems (a) 87,700 1,315,500 63888210
Network Equipment Technologies (a) 61,700 1,565,638 64120810
Newbridge Networks Corp. (a) 13,900 470,863 65090110
Perceptron, Inc. (a) 88,300 1,633,550 71361F10
Target Technologies, Inc. (a) 50,000 375,000 87612N10
5,996,551
TOTAL COMMUNICATIONS EQUIPMENT 7,626,522
COMPUTER SERVICES & SOFTWARE - 10.8%
CAD/CAM/CAE - 2.9%
Brooktrout Technology (a) 17,100 269,325 11458010
Chipcom Corp. (a) 30,000 1,335,000 16961710
Integrated Silicon Systems, Inc. (a) 500 13,625 45812Q10
Structural Dynamics Research Corp. (a) 587,800 4,335,025 86355510
Tecnomatix Technologies (a) 7,500 39,375 91299A92
Viewlogic Systems, Inc. (a) 20,000 195,000 92672110
6,187,350
COMPUTER & SOFTWARE STORES - 0.9%
MicroAge, Inc. (a) 192,800 1,879,800 59492810
COMPUTER SERVICES - 0.1%
CompuCom Systems, Inc. (a) 50,000 168,750 20478010
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.3%
Softdesk, Inc. (a) 29,100 625,650 83402010
ELECTRONIC INFORMATION RETRIEVAL - 0.0%
Data Broadcasting Corp. (a) 15,000 63,750 23759610
PREPACKAGED COMPUTER SOFTWARE - 6.6%
Autodesk, Inc. 30,000 1,162,500 05276910
Broderbund Software, Inc. (a) 20,000 1,037,500 11201410
Delrina Corporation (a) 10,000 143,932 24735L10
Fuji Software, Inc. 13,000 220,350 36599392
Geoworks (a) 6,600 54,450 37369210
Globalink, Inc. (a) 144,300 1,551,225 37936V10
Informix Corp. (a) 100,000 3,775,000 45677910
Infosoft International, Inc. (a) 20,800 878,800 45678310
Learning Co. (a) 10,000 297,500 52200610
LEGENT Corp. (a) 10,000 290,000 52465R10
Novell, Inc. (a) 27,000 548,860 67000610
Oracle Systems Corp. (a) 60,000 1,882,500 68389X10
Parcplace Systems, Inc. (a) 15,000 270,000 69942110
Softkey International, Inc. (a) 78,900 2,011,950 83402N10
Wonderware Corp. (a) 4,000 111,750 97817910
14,236,317
TOTAL COMPUTER SERVICES & SOFTWARE 23,161,617
COMPUTERS & OFFICE EQUIPMENT - 35.7%
COMPUTER EQUIPMENT - WHOLESALE - 1.8%
GBC Technologies, Inc. (a) 149,200 1,119,000 36149F10
Merisel, Inc. (a) 100,000 525,000 58984910
Southern Electronics Corp. (a) 20,000 107,500 84281110
Tech Data Corp. (a) 158,300 2,048,006 87823710
3,799,506
SHARES VALUE (NOTE 1)
COMPUTER PERIPHERALS - 0.9%
Komag, Inc. (a) 19,700 $ 497,425 50045310
Liuski International, Inc. (a) 22,500 101,250 53802910
Plannar Systems, Inc. (a) 5,000 101,250 72690010
Radius, Inc. (a) 117,757 1,118,692 75047020
Western Digital Corp. (a) 6,200 93,000 95810210
1,911,617
COMPUTER RENTAL & LEASING - 1.2%
Comdisco, Inc. 97,200 2,478,600 20033610
COMPUTER STORAGE DEVICES - 1.3%
ADAPTEC, Inc. (a) 1,800 59,400 00651F10
Hutchinson Technology, Inc. (a) 72,100 2,036,825 44840710
Maxtor Corporation (a) 110,000 453,750 57772910
Read Rite Corp. (a) 10,300 164,800 75524610
Seagate Technology (a) 1,900 45,600 81180410
2,760,375
COMPUTERS & OFFICE EQUIPMENT - 3.0%
Canon, Inc. 15,000 223,244 13780199
Data General Corp. (a) 565,600 4,454,100 23768810
Diebold, Inc. 10,000 353,750 25365110
Hewlett-Packard Co. 13,500 1,552,500 42823610
6,583,594
ELECTRONIC COMPUTERS - 0.1%
Intergrated Micro Products
sponsored ADR (a) 25,000 181,250 45812R10
GRAPHICS WORKSTATIONS - 4.2%
Silicon Graphics, Inc. (a) 54,400 1,883,600 82705610
Sun Microsystems, Inc. (a) 223,400 7,148,800 86681010
9,032,400
MAINFRAME COMPUTERS - 7.7%
Amdahl Corp. (a) 477,800 5,315,525 02390510
International Business Machines Corp. 149,300 11,234,825 45920010
16,550,350
MINI & MICRO COMPUTERS - 15.5%
AST Research, Inc. (a) 159,700 2,555,200 00190710
Apple Computer, Inc. 50,000 1,975,000 03783310
Compaq Computer Corp. (a) 528,400 18,229,800 20449310
Digital Equipment Corp. (a) 282,800 9,473,800 25384910
Sequent Computer Systems, Inc. (a) 10,000 171,250 81733810
Tandem Computers, Inc. (a) 60,000 1,020,000 87537010
33,425,050
OFFICE AUTOMATION - 0.0%
Filenet Corp. (a) 2,400 75,000 31686910
TOTAL COMPUTERS & OFFICE EQUIPMENT 76,797,742
CONSUMER ELECTRONICS - 0.1%
RADIOS, TELEVISIONS, STEREOS - 0.1%
Foster Electric Co. Ltd. 20,000 118,237 34999192
Odetics, Inc. Class A (a) 26,000 130,000 67606520
248,237
ELECTRICAL EQUIPMENT - 0.1%
TV & RADIO COMMUNICATION EQUIPMENT - 0.1%
Avid Technology, Inc. (a) 500 16,455 05367P10
Leitch Technology (a) 20,000 233,889 52543H10
250,344
ELECTRONIC INSTRUMENTS - 8.3%
ELECTRONIC EQUIPMENT - 3.7%
ASECO Corp. (a) 63,200 537,200 04365910
Credence Systems Corp. (a) 116,300 2,820,275 22530210
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONIC INSTRUMENTS - CONTINUED
ELECTRONIC EQUIPMENT - CONTINUED
GenRad, Inc. (a) 51,500 $ 302,563 37244710
LTX Corp. (a) 10,000 60,000 50239210
Megatest Corp. (a) 355,200 3,951,600 58495810
Micro Component Technology, Inc. (a) 200 525 59479Q10
Mosaid Technologies, Inc. (a) 7,400 55,252 61945Q10
Tektronix, Inc. 10,000 342,500 87913110
8,069,915
SEMICONDUCTOR CAPITAL EQUIPMENT - 4.6%
Applied Materials, Inc. (a) 22,900 1,056,263 03822210
Electro Scientific Industries, Inc. (a) 79,500 1,500,563 28522910
KLA Instruments Corp. (a) 70,700 4,100,600 48248010
Lam Research Corp. (a) 10,000 400,000 51280710
Silicon Valley Group, Inc. (a) 118,200 2,770,313 82706610
9,827,739
TOTAL ELECTRONIC INSTRUMENTS 17,897,654
ELECTRONICS - 29.8%
ELECTRONIC PARTS - WHOLESALE - 0.2%
Pioneer-Standard Electronics, Inc. 4,950 86,625 72387710
Sterling Electronics Corp. (a) 32,800 385,400 85928110
472,025
ELECTRONICS & ELECTRIC COMPONENTS - 1.1%
Cirrus Logic, Inc. (a) 45,000 1,513,125 17275510
Sanmina Corp. (a) 10,000 290,000 80090710
Videonics, Inc. (a) 29,400 492,450 92657Q10
2,295,575
SEMICONDUCTORS - 28.5%
Advanced Micro Devices, Inc. (a) 32,600 990,225 00790310
Alliance Semiconductor Corp. (a) 15,000 573,750 01877H10
Altera Corp. (a) 5,800 329,875 02144110
Atmel Corp. (a) 21,500 733,688 04951310
Austria Mikro Systeme
International (a)(b) 10,000 839,928 05299B22
Cypress Semiconductor Corp. (a) 10,100 286,588 23280610
Electroglas, Inc. (a) 20,600 795,675 28532410
Geotek Industries, Inc. (a) 80,000 560,000 37365410
IMP, Inc. (a) 160,000 260,000 44969310
Information Storage Devices (a) 600 12,750 45675310
Integrated Device Technology, Inc. (a) 6,200 236,375 45811810
Intel Corp. 50,000 3,987,500 45814010
International Rectifier Corp. (a) 4,000 97,000 46025410
Interpoint Corp. (a) 10,000 86,250 46062710
LSI Logic Corp. (a) 122,800 6,692,600 50216110
Lattice Semiconductor Corp. (a) 26,000 685,750 51841510
Linear Technology Corp. 10,000 545,000 53567810
Logic Devices, Inc. (a) 30,000 112,500 54140210
Micro Linear Corp. (a) 37,900 364,788 59485010
Micron Technology, Inc. 314,000 19,468,000 59511210
National Semiconductor Corp. (a) 43,300 730,688 63764010
Quality Semiconductor, Inc. (a) 92,400 1,108,800 74758B10
SGS-Thomson Microelectronic NV (a) 112,500 2,812,500 78421310
S-3, Inc. (a) 72,400 1,321,300 78484910
Samsung Electronics Co. Ltd.:
GDR (a)(b) 5,420 336,040
GDS (a)(b) 59,675 2,267,650 79605020
GDS (Reg.)(non-vtg.) (a) 71,600 2,720,800 79611093
Siliconix, Inc. (a) 600 7,350 82707920
Supertex, Inc. (a) 20,000 157,500 86853210
Tencor Instruments (a) 24,200 1,149,500 88032310
Texas Instruments, Inc. 79,300 6,244,875 88250810
SHARES VALUE (NOTE 1)
Uniphase Corp. (a) 14,300 $ 250,250 90914910
Xilinx, Inc. (a) 70,000 4,681,250 98391910
61,446,745
TOTAL ELECTRONICS 64,214,345
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
GENERAL INDUSTRIAL MACHINERY - 0.0%
Robotic Vision Systems, Inc. (a) 15,000 93,750 77107410
SPECIAL INDUSTRIAL MACHINERY - 2.2%
Asyst Technologies, Inc. (a) 48,200 1,566,500 04648X10
Fuji Machine Manufacturing Co. Ltd. Ord. 30,000 781,355 36099892
Gasonics International Corp. (a) 65,800 1,151,500 36727810
PRI Automation, Inc. (a) 67,500 1,215,000 69357H10
4,714,355
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,808,105
LEASING & RENTAL - 0.0%
EQUIPMENT RENTAL & LEASING - 0.0%
Leasing Solutions, Inc. (a) 14,000 101,500 52211310
MEDICAL EQUIPMENT & SUPPLIES - 0.2%
MEDICAL SUPPLIES & APPLIANCES - 0.2%
Steris Corporation (a) 10,000 331,250 85915210
RETAIL & WHOLESALE, MISCELLANEOUS - 1.0%
MAIL ORDER - 1.0%
Gateway 2000, Inc. (a) 120,800 2,219,700 36783310
STATIONARY & OFFICE SUPPLIES - WHOLESALE - 0.0%
Daisytek International Corp. (a) 1,000 17,750 23405310
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 2,237,450
SERVICES - 0.1%
ELECTRICAL REPAIR SHOPS - 0.1%
Cerplex Group, Inc. (a) 20,000 160,000 15691320
TOTAL COMMON STOCKS
(Cost $179,761,236) 197,834,766
NONCONVERTIBLE PREFERRED STOCKS - 0.1%
COMPUTER SERVICES & SOFTWARE - 0.1%
PREPACKAGED COMPUTER SOFTWARE - 0.1%
Sap AG (Cost $122,656) 200 164,702 80899893
CONVERTIBLE BONDS - 6.4%
PRINCIPAL
AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 3.6%
ELECTRONIC COMPUTERS - 3.3%
Acer, Inc. 4%, 6/10/01 $ 2,890,000 7,051,600 004993AC
OFFICE EQUIPMENT - WHOLESALE - 0.3%
Kinpo Electronics, Inc. euro
3%, 7/21/01 950,000 707,750 4971269A
TOTAL COMPUTERS & OFFICE EQUIPMENT 7,759,350
CONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ELECTRONICS - 2.8%
SEMICONDUCTORS - 2.8%
United Microelectronics Corp.
1 1/4%, 6/8/04 cv (b) $ 1,070,000 $ 1,465,900 910873AA
1 1/4%, 6/8/04 ecv 3,330,000 4,562,100 911993AB
6,028,000
TOTAL CONVERTIBLE BONDS
(Cost $13,497,459) 13,787,350
OTHER SECURITIES - 0.3%
INDEXED SECURITIES - 0.3%
Hewlett Packard Finance Co. 0%, 4/25/95
(indexed to price of Hewlett Packard
common stock) (b)
(Cost $424,000) 400,000 550,800 4282399A
REPURCHASE AGREEMENTS - 1.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 6.08%
dated 2/28/95 due 3/1/95 $2,957,499 2,957,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $196,762,351) $ 215,294,618
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $5,460,318 or 2.5% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $356,502,723 and $233,611,366, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $154,477 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $14,435,000 and $4,045,945,
respectively. The weighted average interest rate paid was 4.6% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 88.3%
Taiwan (Free China) 6.4
Korea 2.4
Netherlands 1.3
Others (individually less than 1%) 1.6
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $198,158,933. Net unrealized appreciation
aggregated $17,135,685, of which $29,576,859 related to appreciated
investment securities and $12,441,174 related to depreciated investment
securities.
The fund hereby designates $1,275,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
COMPUTERS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $2,957,000) (cost $196,762,351) - See $ 215,294,618
accompanying schedule
Cash 866
Receivable for investments sold 6,396,828
Receivable for fund shares sold 4,563,260
Dividends receivable 47,797
Interest receivable 106,810
Redemption fees receivable 931
Other receivables 25,818
TOTAL ASSETS 226,436,928
LIABILITIES
Payable for investments purchased $ 2,938,279
Payable for fund shares redeemed 8,209,376
Accrued management fee 107,020
Other payables and accrued expenses 168,453
TOTAL LIABILITIES 11,423,128
NET ASSETS $ 215,013,800
Net Assets consist of:
Paid in capital $ 193,194,067
Accumulated net investment (loss) (21,983
)
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 3,309,421
Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies 18,532,295
NET ASSETS, for 7,011,243 shares outstanding $ 215,013,800
NET ASSET VALUE and redemption price per share ($215,013,800 (divided by) 7,011,243 shares) $30.67
Maximum offering price per share (100/97.00 of $30.67) $31.62
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 342,259
Dividends
Interest 415,256
TOTAL INCOME 757,515
EXPENSES
Management fee $ 818,112
Transfer agent 1,232,736
Fees
Redemption fees (159,546
)
Accounting fees and expenses 132,274
Non-interested trustees' compensation 1,246
Custodian fees and expenses 21,543
Registration fees 131,497
Audit 22,837
Legal 1,252
Interest 39,442
Reports to shareholders 4,156
Miscellaneous 750
Total expenses before reductions 2,246,299
Expense reductions (19,027 2,227,272
)
NET INVESTMENT INCOME (LOSS) (1,469,757
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 3,563,806
Foreign currency transactions 321 3,564,127
Change in net unrealized appreciation (depreciation) on:
Investment securities 2,952,712
Assets and liabilities in foreign currencies 28 2,952,740
NET GAIN (LOSS) 6,516,867
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 5,047,110
OTHER INFORMATION $2,229,925
Sales Charges Paid to FDC
Deferred sales charges withheld $6,636
by FDC
Exchange fees withheld by FSC $134,438
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (1,469,757 $ (377,060
Net investment income (loss) ) )
Net realized gain (loss) 3,564,127 5,305,912
Change in net unrealized appreciation (depreciation) 2,952,740 11,882,729
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,047,110 16,811,581
Distributions to shareholders from net realized gains - (3,924,122
)
Share transactions 529,347,764 184,130,331
Net proceeds from sales of shares
Reinvestment of distributions - 3,842,739
Cost of shares redeemed (441,147,769 (128,419,730
) )
Paid in capital portion of redemption fees 1,332,121 398,209
Net increase (decrease) in net assets resulting from share transactions 89,532,116 59,951,549
TOTAL INCREASE (DECREASE) IN NET ASSETS 94,579,226 72,839,008
NET ASSETS
Beginning of period 120,434,574 47,595,566
End of period (including accumulated net investment loss of $(21,983) and $(10,697), respectively) $ 215,013,800 $ 120,434,574
OTHER INFORMATION
Shares
Sold 18,730,329 7,631,888
Issued in reinvestment of distributions - 169,028
Redeemed (16,175,513 (5,706,315
) )
Net increase (decrease) 2,554,816 2,094,601
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 27.02 $ 20.15 $ 17.63 $ 16.60 $ 12.68
Income from Investment Operations
Net investment income (loss) (.31) (.21) G (.15) (.03) F .42 E
Net realized and unrealized gain (loss) 3.68 8.66 2.44 1.18 3.21
Total from investment operations 3.37 8.45 2.29 1.15 3.63
Less Distributions - - - - (.12)
From net investment income
In excess of net investment income - - - (.27) -
From net realized gain - (1.80) - (.22) -
Total distributions - (1.80) - (.49) (.12)
Redemption fees added to paid in capital .28 .22 .23 .37 .41
Net asset value, end of period $ 30.67 $ 27.02 $ 20.15 $ 17.63 $ 16.60
TOTAL RETURN B, C 13.51% 45.06% 14.29% 9.36% 32.11%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 215,014 $ 120,435 $ 47,596 $ 32,810 $ 29,455
Ratio of expenses to average net assets 1.69% 1.89% 1.81% A 2.17% 2.26%
Ratio of expenses to average net assets before expense reductions 1.71% 1.90% 1.81% A 2.17% 2.26%
Ratio of net investment income (loss) to average net assets (1.12)% (.91)% (.98)% (.18)% 2.94%
A
Portfolio turnover rate 189% 145% 254% A 568% 695%
</TABLE>
1 ANNUALIZED
2 THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
3 TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
4 NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING EACH PERIOD.
5 INVESTMENT INCOME PER SHARE REFLECTS SPECIAL DIVIDENDS WHICH AMOUNTED TO
$.08 PER SHARE AND $.36 PER SHARE RELATING TO A NONRECURRING INITIATIVE TO
INVEST IN DIVIDEND INCOME PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A
PORTION OF 1991.
6 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.22 PER SHARE RELATING TO A NONRECURRING INITIATIVE TO INVEST IN DIVIDEND
INCOME PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A PORTION OF 1992.
7 INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND FROM INTELLIGENT
ELECTRONICS WHICH AMOUNTED TO $.07 PER SHARE.
DEFENSE AND AEROSPACE PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value). If Fidelity had not reimbursed
certain fund expenses during the period, the fund's total returns would
have been lower.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 4.13% 79.86% 67.93%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) 1.01% 74.46% 62.90%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
DEFENSE AND AEROSPACE 4.13% 12.46% 5.32%
DEFENSE AND AEROSPACE
(INCL. 3% SALES CHARGE) 1.01% 11.77% 5.00%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and return
of
a fund that invests in a sector will vary. That
means if you sell your shares during a sector
downturn, you might lose money. But if you
can identify a sector that is about to
experience rapid growth you may have the
potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Defense (067)Standard & Poor's 50
02/28/85 9700.00 10000.00
03/31/85 9424.10 10007.00
04/30/85 9082.86 9997.99
05/31/85 9300.67 10575.88
06/30/85 9695.12 10741.92
07/31/85 9973.17 10725.81
08/31/85 9943.90 10634.64
09/30/85 9365.85 10301.77
10/31/85 9534.14 10777.71
11/30/85 10046.34 11517.07
12/31/85 10470.73 12074.49
01/31/86 10339.02 12142.11
02/28/86 10902.43 13050.34
03/31/86 11524.39 13778.55
04/30/86 11612.19 13622.85
05/31/86 11897.56 14347.59
06/30/86 12146.34 14590.06
07/31/86 11391.04 13774.48
08/31/86 11977.28 14796.54
09/30/86 11012.57 13572.87
10/31/86 11160.99 14356.02
11/30/86 11517.19 14704.87
12/31/86 10975.47 14329.90
01/31/87 11932.76 16260.14
02/28/87 12689.69 16902.41
03/31/87 12452.22 17390.89
04/30/87 11910.50 17236.11
05/31/87 11747.24 17386.07
06/30/87 11635.92 18264.06
07/31/87 11947.60 19190.05
08/31/87 11821.45 19905.84
09/30/87 11583.98 19469.90
10/31/87 8630.47 15276.09
11/30/87 8185.22 14017.34
12/31/87 8429.31 15084.06
01/31/88 8971.64 15719.09
02/29/88 9506.22 16451.60
03/31/88 9482.98 15943.25
04/30/88 9421.00 16120.22
05/31/88 9064.61 16260.46
06/30/88 9436.49 17006.82
07/31/88 9250.55 16942.19
08/31/88 9025.87 16366.16
09/30/88 9297.04 17063.36
10/31/88 9281.54 17537.72
11/30/88 8870.92 17286.93
12/31/88 8793.45 17589.45
01/31/89 9142.09 18877.00
02/28/89 9103.35 18406.96
03/31/89 9289.29 18835.84
04/30/89 9622.43 19813.42
05/31/89 9792.88 20615.87
06/30/89 9676.66 20498.36
07/31/89 10304.21 22349.36
08/31/89 10567.63 22787.41
09/30/89 10373.94 22693.98
10/31/89 9785.13 22167.48
11/30/89 9413.25 22619.69
12/31/89 9568.20 23162.57
01/31/90 9025.87 21608.36
02/28/90 9056.86 21887.11
03/31/90 9614.68 22467.12
04/30/90 9219.56 21905.44
05/31/90 9901.34 24041.22
06/30/90 9908.46 23877.74
07/31/90 9510.88 23801.33
08/31/90 8676.73 21649.69
09/30/90 8396.08 20595.35
10/31/90 8286.94 20506.79
11/30/90 8731.30 21831.53
12/31/90 9129.59 22440.63
01/31/91 9935.38 23419.04
02/28/91 10130.95 25093.50
03/31/91 10913.27 25700.76
04/30/91 10733.33 25762.44
05/31/91 11234.01 26875.38
06/30/91 10668.80 25644.49
07/31/91 11132.32 26839.52
08/31/91 11014.48 27475.62
09/30/91 10755.22 27016.78
10/31/91 11273.73 27378.80
11/30/91 10763.08 26275.44
12/31/91 11587.98 29281.34
01/31/92 11548.70 28736.71
02/29/92 11729.40 29110.29
03/31/92 11493.71 28542.64
04/30/92 11289.45 29381.79
05/31/92 10723.79 29525.76
06/30/92 10220.99 29085.83
07/31/92 10613.81 30275.44
08/31/92 10409.54 29654.79
09/30/92 10558.81 30004.72
10/31/92 10645.23 30109.74
11/30/92 11014.48 31136.48
12/31/92 11587.98 31519.46
01/31/93 11933.66 31784.22
02/28/93 11847.24 32216.49
03/31/93 12475.74 32896.25
04/30/93 12515.02 32100.16
05/31/93 12899.98 32960.45
06/30/93 13442.06 33056.03
07/31/93 13992.00 32923.81
08/31/93 13968.43 34171.62
09/30/93 14329.82 33908.50
10/31/93 14903.33 34610.41
11/30/93 14463.37 34281.61
12/31/93 14932.02 34696.42
01/31/94 15643.06 35876.09
02/28/94 15643.06 34903.85
03/31/94 15013.75 33382.04
04/30/94 15095.23 33809.33
05/31/94 15144.99 34363.81
06/30/94 14763.46 33521.89
07/31/94 14979.11 34621.41
08/31/94 15650.93 36040.89
09/30/94 14862.99 35157.89
10/31/94 15227.93 35948.94
11/30/94 14630.76 34639.68
12/31/94 15194.75 35153.39
01/31/95 15186.46 36064.91
02/28/95 16289.57 37470.36
Let's say you invested $10,000 in Fidelity Select Defense and Aerospace
Portfolio on February 28, 1985, and paid a 3% sales charge. By February 28,
1995, your investment would have grown to $16,290 - a 62.90% increase. That
compares to $10,000 invested in the S&P 500, which would have grown to
$37,470 over the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
McDonnell Douglas Corp. 8.0
Martin Marietta Corp. 8.0
Lockheed Corp. 7.9
United Technologies Corp. 6.8
Rockwell International Corp. 5.6
Amphenol Corp. Class A 4.0
General Dynamics Corp. 3.8
General Motors Corp. Class H 3.8
Watkins-Johnson Co. 3.7
Loral Corp. 3.3
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 29.0
Row: 1, Col: 2, Value: 6.3
Row: 1, Col: 3, Value: 10.7
Row: 1, Col: 4, Value: 14.3
Row: 1, Col: 5, Value: 16.1
Row: 1, Col: 6, Value: 23.6
Missiles & Space Vehicles 23.6%
Defense Electronics 16.1%
Conglomerates 14.3%
Aircraft 10.7%
Electrical Machinery 6.3%
All Others 29.0%*
* INCLUDES SHORT-TERM INVESTMENTS
DEFENSE AND AEROSPACE PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Bill Rubin,
Portfolio Manager of
Fidelity Select Defense and Aerospace Portfolio
Q. HOW DID THE FUND PERFORM, BILL?
A. The fund returned 4.13% for the 12 months ended February 28, 1995, which
lagged the S&P 500's 7.36% return.
Q. WHAT FACTORS HAD THE GREATEST EFFECT ON PERFORMANCE OVER THE PAST 12
MONTHS?
A. During most of 1994, the fund underperformed the broad market. A
substantial portion of the fund's stocks are multi-industry conglomerates
that are cyclical in nature - meaning they generally rise and fall with the
economy. As interest rates rose, investors feared that the economy might
slow, which caused cyclical stocks to fall out of favor. However, these
conglomerates and other defense companies have continued to rapidly improve
their profit margins, generate very strong cash flows and grow their
earnings. Their balance sheets have shown impressive improvements as a
result of their various corporate restructuring and cost-cutting
initiatives to enhance shareholder value, including stock buy-backs,
additive acquisitions and higher dividends. All of these factors have
helped the fund outperform the S&P 500 over the last three months of the
period.
Q. WHICH INDIVIDUAL STOCKS HELPED PERFORMANCE DURING THE YEAR?
A. Among the fund's top 10 holdings, McDonnell Douglas, United
Technologies, Martin Marietta, and Lockheed all have been strong
performers. McDonnell Douglas has improved its balance sheet significantly
and has been generating higher profit margins and strong cash flows from
the maturing of many of its long-term military production contracts. The
company's C-17 military transport aircraft program got back on track and
has the potential to produce excellent profit margin improvement in 1995
and beyond. Also, McDonnell Douglas' stock repurchase program has been very
aggressive. The merger between Martin Marietta and Lockheed will create the
country's largest defense contractor, which should capitalize on numerous
financial and marketing synergies. As a combined entity, Lockheed Martin
should generate better operating profit margins, tremendous cash flow and
steady earnings growth, despite flat revenues. In anticipation of the
benefits of consolidation, the prices of both stocks recently have been
rising.
Q. WHAT ABOUT THE MULTI-INDUSTRY CONGLOMERATES? HOW HAVE THEY PERFORMED?
A. United Technologies (UT), the fund's largest investment in the
conglomerates, has continued to enjoy good earnings growth and cash flow as
a result of stronger global economic growth. It also has benefited from
downsizing and cost-cutting in certain of its segments. As a result, the
company's balance sheet has improved greatly as it has used its excess cash
to pay down debt and repurchase stock. The improvement of these operating
fundamentals is an encouraging sign going forward for UT and for other
conglomerates - Rockwell and Raytheon, for example - that have followed
similar strategies. I expect the multi-industry conglomerate stocks to
continue to rise in price over the next couple years.
Q. COMMERCIAL AEROSPACE COMPANIES HAVE BEEN SOMEWHAT DE-EMPHASIZED IN THE
PORTFOLIO RECENTLY. WHAT IS YOUR CURRENT VIEW OF THIS INDUSTRY SECTOR?
A. Commercial aerospace is more cyclical in nature, driven by economic
factors as well as the serviceability of existing commercial aircraft, and
I believe the sector may reach the trough of its current down-cycle this
year. Worldwide demand for commercial aircraft should soon begin to grow,
driven by noise reduction requirements, the normal aging of fleets now in
service, continued growth in worldwide air traffic, and the improving
financial condition of airlines. Demand should be especially high in Asia
over the next decade.
Q. WHAT IS YOUR GAME PLAN FOR THE FUND GOING FORWARD?
A. Of course, it's impossible to predict short-term movements in the
market. However, the fund is currently positioned to take advantage of
continued good prospects in the defense and multi-industry stocks. I
believe there will continue to be good appreciation in these sectors,
driven by continued profit margin improvement, strong cash flow, stock
buy-backs, and merger and acquisition activity. I plan to keep the fund
invested in these sectors, but also soon plan to become more heavily
invested in commercial aerospace stocks. I believe these stocks could begin
to appreciate, and would expect to continue holding them over the next
couple years of their up-cycle. In particular, I plan to keep a close eye
on Boeing and its sub-contractors as potential buys.
FUND FACTS
START DATE: May 8, 1984
SIZE: as of February 28, 1995, more than
$4 million
MANAGER: Bill Rubin, since December 1,
1994; equity analyst, defense electronics,
aerospace, and electronic connectors
industries, since August 1994; joined Fidelity
in 1994
(checkmark)
DEFENSE AND AEROSPACE PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 86.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 44.6%
AIRCRAFT - 10.7%
McDonnell Douglas Corp. 7,000 $ 392,000 58016910
Northrop Corp. 3,000 133,125 66680710
525,125
AIRCRAFT & PARTS - 3.6%
Precision Castparts Corp. 5,000 116,250 74018910
ROHR Industries, Inc. (a) 5,000 56,250 77542210
172,500
AIRCRAFT ENGINES & PARTS - 3.9%
General Motors Corp. Class H 5,000 188,125
AIRCRAFT EQUIPMENT - 1.5%
Transtechnology Corp. 6,400 75,200 89388910
MISSILES & SPACE VEHICLES - 23.1%
Lockheed Corp. 5,000 388,125 53982110
Martin Marietta Corp. 8,200 391,550 57290010
Orbital Sciences Corporation (a) 3,000 53,250 68556410
Rockwell International Corp. 7,100 273,350 77434710
Thiokol Corp. 1,000 25,875 88410310
1,132,150
ORDNANCE - 0.9%
Alliant Techsystems, Inc. (a) 1,200 45,300 01880410
TRAINING EQUIPMENT & SIMULATORS - 0.9%
Flightsafety International, Inc. 1,000 44,375 33942310
TOTAL AEROSPACE & DEFENSE 2,182,775
AIR TRANSPORTATION - 0.2%
AIR TRANSPORT, MAJOR NATIONAL - 0.2%
KLM Royal Dutch Airlines (a) 400 11,700 48251610
AUTOS, TIRES, & ACCESSORIES - 1.3%
AUTO & TRUCK PARTS - 1.3%
TRW, Inc. 1,000 65,750 87264910
CONGLOMERATES - 14.3%
Allied-Signal, Inc. 2,000 76,000 01951210
Harris Corp. 3,000 135,000 41387510
Sequa Corp. Class A (a) 3,000 84,375 81732010
Textron, Inc. 1,300 71,175 88320310
United Technologies Corp. 5,000 331,875 91301710
TOTAL CONGLOMERATES 698,425
DEFENSE ELECTRONICS - 16.1%
E-Systems, Inc. 2,000 87,500 26915730
Litton Industries, Inc. 3,000 109,500 53802110
Loral Corp. 4,000 163,500 54385910
Raytheon Co. 2,000 141,000 75511110
Tracor, Inc. (a) 10,000 106,250 89234920
Watkins-Johnson Co. 5,000 182,500 94248610
TOTAL DEFENSE ELECTRONICS 790,250
ELECTRICAL EQUIPMENT - 6.3%
ELECTRICAL MACHINERY - 6.3%
Amphenol Corp. Class A (a) 8,000 197,000 03209420
General Electric Co. 2,000 109,750 36960410
TOTAL ELECTRICAL EQUIPMENT 306,750
SHIP BUILDING & REPAIR - 3.8%
SHIP BUILDERS - 3.8%
General Dynamics Corp. 4,000 188,500 36955010
TOTAL COMMON STOCKS
(Cost $3,968,434) 4,244,150
CORPORATE BONDS - 0.5%
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 0.5%
AEROSPACE & DEFENSE - 0.5%
MISSILES & SPACE VEHICLES - 0.5%
Orbital Sciences Corp. 6 3/4%,
3/1/03 (Cost $18,000) $ 18,000 $ 22,860 685564AA
REPURCHASE AGREEMENTS - 12.9%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $630,106 630,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $4,616,434) $ 4,897,010
LEGEND
1. Non-income producing
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $7,088,793 and $11,539,752, respectively (see Note 4 of Notes to
Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $6,197 for the period (see
Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,032,000 and $2,009,750,
respectively. The weighted average interest rate paid was 4.2% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $4,642,048. Net unrealized appreciation aggregated
$254,962, of which $294,908 related to appreciated investment securities
and $39,946 related to depreciated investment securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $293,000 all of which will expire on February 28, 2003.
DEFENSE AND AEROSPACE PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $630,000) (cost $4,616,434) - See $ 4,897,010
accompanying schedule
Cash 712
Receivable for fund shares sold 229,583
Dividends receivable 16,036
Interest receivable 604
Other receivables 1,172
Receivable from investment adviser for expense reductions 5,370
TOTAL ASSETS 5,150,487
LIABILITIES
Payable for investments purchased $ 110,000
Payable for fund shares redeemed 35,853
Accrued management fee 2,437
Other payables and accrued expenses 17,545
TOTAL LIABILITIES 165,835
NET ASSETS $ 4,984,652
Net Assets consist of:
Paid in capital $ 5,015,331
Accumulated undistributed (311,255
net realized gain (loss) )
on investments
Net unrealized appreciation (depreciation) on investments 280,576
NET ASSETS, for 253,837 shares outstanding $ 4,984,652
NET ASSET VALUE and redemption price per share ($4,984,652 (divided by) 253,837 shares) $19.64
Maximum offering price per share (100/97.00 of $19.64) $20.25
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 91,033
Dividends
Interest 23,640
TOTAL INCOME 114,673
EXPENSES
Management fee $ 32,632
Transfer agent 93,309
Fees
Redemption fees (14,321
)
Accounting fees and expenses 45,035
Non-interested trustees' compensation 73
Custodian fees and expenses 10,469
Registration fees 21,554
Audit 18,159
Legal 68
Interest 942
Reports to shareholders 845
Miscellaneous 40
Total expenses before reductions 208,805
Expense reductions (77,299 131,506
)
NET INVESTMENT INCOME (LOSS) (16,833
)
REALIZED AND UNREALIZED GAIN (LOSS) (307,440
Net realized gain (loss) on investment securities )
Change in net unrealized appreciation (depreciation) on investment securities (46,619
)
NET GAIN (LOSS) (354,059
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (370,892
)
OTHER INFORMATION $55,192
Sales Charges Paid to FDC
Deferred sales charges withheld $654
by FDC
Exchange fees withheld by FSC $12,218
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (16,833 $ 18,345
Net investment income (loss) )
Net realized gain (loss) (307,440 629,513
)
Change in net unrealized appreciation (depreciation) (46,619 236,253
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (370,892 884,111
)
Distributions to shareholders: - (15,420
From net investment income )
From net realized gain (145,443 (95,604
) )
TOTAL DISTRIBUTIONS (145,443 (111,024
) )
Share transactions 13,049,647 29,885,117
Net proceeds from sales of shares
Reinvestment of distributions 142,332 109,302
Cost of shares redeemed (18,865,024 (21,129,974
) )
Paid in capital portion of redemption fees 38,135 35,674
Net increase (decrease) in net assets resulting from share transactions (5,634,910 8,900,119
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,151,245 9,673,206
)
NET ASSETS
Beginning of period 11,135,897 1,462,691
End of period (including undistributed net investment income (loss) of $0 and $2,925, respectively) $ 4,984,652 $ 11,135,897
OTHER INFORMATION
Shares
Sold 690,722 1,666,363
Issued in reinvestment of distributions 7,812 6,120
Redeemed (1,026,621 (1,187,524
) )
Net increase (decrease) (328,087) 484,959
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.14 $ 15.08 $ 14.37 $ 13.72 $ 11.90
Income from Investment Operations
Net investment income (loss) (.06) .07 (.02) (.01) .10
Net realized and unrealized gain (loss) .70 E 4.57 .69 .67 1.72
Total from investment operations .64 4.64 .67 .66 1.82
Less Distributions - (.10) - (.04) (.12)
From net investment income
In excess of net investment income - - - (.02) -
From net realized gain (.27) (.62) - - -
Total distributions (.27) (.72) - (.06) (.12)
Redemption fees added to paid in capital .13 .14 .04 .05 .12
Net asset value, end of period $ 19.64 $ 19.14 $ 15.08 $ 14.37 $ 13.72
TOTAL RETURN B, C 4.13% 32.04% 4.94% 5.18% 16.42%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 4,985 $ 11,136 $ 1,463 $ 1,280 $ 3,070
Ratio of expenses to average net assets 2.49% 2.53% 2.48% A 2.46% 2.49%
Ratio of expenses to average net assets before expense reductions 3.95% 3.58% 9.63% A 2.72% 3.11%
Ratio of net investment income (loss) to average net assets (.32)% .40% (.14)% (.10)% .78%
A
Portfolio turnover rate 146% 324% 87% A 32% 162%
</TABLE>
a ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD ENDED DUE TO THE
TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO FLUCTUATING
MARKET VALUES OF THE INVESTMENTS OF THE FUND.
DEVELOPING COMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1995 YEAR FUND
DEVELOPING COMMUNICATIONS 13.63% 161.21%
DEVELOPING COMMUNICATIONS (INCL. 3% SALES CHARGE)
10.22% 153.37%
S&P 500 7.36% 57.13%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, or since the fund started on
June 29, 1990. You can compare these figures to the performance of the S&P
500 - a common proxy for the U.S. stock market. This benchmark includes
reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 LIFE OF
FEBRUARY 28, 1995 YEAR FUND
DEVELOPING COMMUNICATIONS 13.63% 22.80%
DEVELOPING COMMUNICATIONS
(INCL. 3% SALES CHARGE) 10.22% 22.01%
S&P 500 7.36% 10.14%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Let's say you invested $10,000 in Fidelity Select Developing Communications
Portfolio on June 29, 1990, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $25,337 -
a 153.37% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $15,713 over the same period - a 57.13% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
DSC Communications Corp. 6.1
Airtouch Communications 4.0
BCE Mobile Communications, Inc. 3.6
Vodafone Group PLC sponsored ADR 3.3
Tellabs, Inc. 3.2
Allen Group, Inc. 2.8
Newbridge Networks Corp. 2.3
Cellular Communications Puerto Rico Inc. 2.2
Nokia Corp. AB sponsored ADR 2.1
Dialogic Corp. 2.1
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 34.5
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 3.9
Row: 1, Col: 4, Value: 6.9
Row: 1, Col: 5, Value: 23.1
Row: 1, Col: 6, Value: 27.8
Cellular & Communication
Services 27.8%
Telephone Equipment 23.1%
Telephone Services 6.9%
Electronics & Electric
Components 3.9%
Semiconductors 3.8%
All Others 34.5%*
* INCLUDES SHORT-TERM INVESTMENTS
DEVELOPING COMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Paul Antico,
Portfolio Manager of
Fidelity Select Developing
Communications Portfolio
Q. PAUL, HOW DID THE FUND DO?
A. Quite well. For the 12 months ended February 28, 1995, the fund returned
13.63%, beating the S&P 500, which had a return of 7.36%.
Q. WHY DID THE FUND OUTPERFORM THE S&P 500?
A. Mostly because it was heavily weighted in cellular telephone stocks, and
those stocks were strong performers throughout the year. In addition, I
chose stocks that were strong performers and managed to avoid most of the
stocks that were "land mines."
Q. LET'S LOOK AT THE YEAR IN REVIEW. AT THE BEGINNING OF 1994, THERE WAS A
SHIFT OUT OF DIVERSIFIED TECHNOLOGY AND INTO TELECOMMUNICATIONS EQUIPMENT
SUPPLIERS, AND MID-YEAR A SHIFT INTO CELLULAR COMPANIES. WHAT PAID OFF AND
WHAT DIDN'T?
A. My initial move into equipment suppliers, shortly after I took over as
manager, was an attempt to gain tighter control of the fund. I wanted to
focus on making it a more strictly defined developing communications fund,
instead of another broad technology fund. Unfortunately, equipment
suppliers performed poorly for the first half of the year. However, many of
these companies -such as DSC Communications and Newbridge Networks
- -continued to demonstrate strong growth characteristics and turned in
better than expected second half returns. That said, my increased focus in
the second half of the year on cellular stocks proved to be very
beneficial. As I noted, these stocks turned out to be excellent performers.
Q. WHAT CELLULAR STOCKS LOOKED GOOD OVER THE PERIOD?
A. At the beginning of the 12-month period, Glenayre Technologies, which
benefited from the world-wide growth of paging devices, turned in great
results. Finnish cellular provider Nokia also was a strong performer.
However, I pared back the fund's investments in the company shortly before
Motorola reported a handset glut in the U.S. market, which negatively
affected the psychology around Nokia. I should point out that Nokia still
remained one of my top holdings at the end of the period.
Q. WHAT NEW HOLDINGS WERE ATTRACTIVE?
A. I liked other foreign cellular providers, such as BCE Mobile
Communications in Canada and Vodafone in Great Britain. In general, foreign
cellular stocks look good because market penetration is lower than it is in
the United States and subscriber growth is even more rapid. In addition,
many foreign markets' profit margins are improving quite notably.
Q. DID ANY OTHER CELLULAR STOCKS STAND OUT?
A. Yes. Cellular service companies that target rural U.S. markets, such as
Vanguard and Commnet Cellular, were strong performers. Like international
cellular providers, these companies are growing very quickly and have
improving margins. That's mostly because market penetration is lower in
rural than in urban areas.
Q. ARE THERE FUTURE TRENDS IN DEVELOPING COMMUNICATIONS THAT ARE WORTH
NOTING?
A. Besides remaining committed to cellular and attractive
telecommunications equipment stocks, I'm keeping my eye on a few other
longer-term trends. I'm fascinated with the buzz around the Internet and am
investing in it through a small investment in modems. Another theme is U.K.
cable/telephone companies, which provide British consumers telephone and
cable TV services through one coaxial cable - a service prohibited in the
United States. This means there's one carrier and one service bill for
customers. These stocks have no earnings yet, so I'm just looking at their
potential. Another theme is the privatization and deregulation of Europe's
entire communication system by 1998. Basically, I think it will be an
opportunity similar to the 1984 breakup of the AT&T monopoly.
Q. DO YOU HAVE ANY REGRETS OVER THE PAST YEAR?
A. Sometimes I wish I'd had more invested in the computer technology
market, which has turned in a strong performance this year. However, I am
very comfortable with the cellular market's strong and, what I consider to
be, much safer returns. Frankly, I feel uncomfortable timing the technology
market because you can end up with tremendous losses.
Q. PAUL, HOW DOES THE FUND LOOK GOING FORWARD?
A. I think its outlook is good. The fund is invested in stocks that are
cheap relative to their fundamentals and growth and ones that I anticipate
will keep getting better as we move ahead.
FUND FACTS
START DATE: June 29, 1990
SIZE: as of February 28, 1995, more than
$254 million
MANAGER: Paul Antico, since 1993; equity
analyst, telecommunications equipment, since
1992, restaurant industry, 1992-1993, and
wireless communications, since 1993;
assistant, Fidelity Balanced Fund and Fidelity
Equity Income II Fund, 1991-1992; joined Fidelity
in 1991
(checkmark)
DEVELOPING COMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 91.6%
SHARES VALUE (NOTE 1)
APPLIANCE STORES - 1.3%
ELECTRIC APPLIANCES - WHOLESALE - 1.3%
Cellstar Corp. (a) 152,000 $ 3,381,995 15092510
AUTOS, TIRES, & ACCESSORIES - 2.8%
AUTO & TRUCK PARTS - 2.8%
Allen Group, Inc. (The) 312,000 7,332,000 01763410
BROADCASTING - 3.6%
CABLE TV OPERATORS - 2.9%
Bell Cablemedia PLC ADR (a) 99,200 2,033,600 07791010
Comcast UK Cable Partners
Ltd. Class A (a) 132,900 2,118,094 20099622
Viacom, Inc. Class B (non-vtg.) (a) 80,000 3,580,000 92552430
7,731,694
COMMUNICATIONS SERVICES - 0.6%
International Cabletel, Inc. (a) 45,200 1,446,400 45921610
RADIO BROADCASTING - 0.1%
International Cablecasting
Technologies, Inc. (a) 96,000 264,000 45921L10
TOTAL BROADCASTING 9,442,094
CELLULAR - 27.8%
CELLULAR & COMMUNICATION SERVICES - 27.8%
Airtouch Communications (a) 383,425 10,448,331 00949T10
Arch Communications Group, Inc. (a) 157,700 2,976,588 03938110
BCE Mobile Communications, Inc. (a) 279,700 9,385,062 05534G10
Cellular Communications, Inc. Series A
(redeemable) (a) 116,200 5,897,150 15091710
Cellular Communications, Inc. Class P (a) 19,550 1,018,360 15091793
Cellular Communications
International, Inc. (a) 25,000 1,056,250 15091810
Cellular Communications
Puerto Rico Inc. (a) 140,000 4,830,000 15091910
Commnet Cellular, Inc. (a) 213,000 4,899,000 20260410
LIN Broadcasting Corp. 29,800 3,855,375 53276310
Metrocall, Inc. (a) 152,800 2,674,000 59164710
Millicom International Cellular SA (a) 60,000 1,635,000 60081492
Nationwide Cellular Service, Inc. (a) 176,000 3,168,000 63859510
Nera SA (a) 75,000 1,512,038 64099722
USA Mobile Communications (a) 307,544 3,844,300 90329B10
United States Cellular Corp. (a) 84,200 2,810,175 91168410
Vanguard Cellular Systems, Inc.
Class A (a) 164,550 4,278,300 92202210
Vodafone Group PLC sponsored ADR 287,700 8,774,850 92857T10
TOTAL CELLULAR 73,062,779
COMMUNICATIONS EQUIPMENT - 25.2%
DATACOMMUNICATIONS EQUIPMENT - 1.1%
Bolt Beranek & Newman, Inc. (a) 54,300 862,013 09768910
Dynatech Corp. (a) 27,700 1,004,125 26813810
US Robotics, Inc. (a) 20,000 1,080,000 91246610
2,946,138
TELEPHONE EQUIPMENT - 23.1%
ADC Telecommunications, Inc. (a) 57,400 3,200,050 00088610
Andrew Corp. (a) 24,400 1,415,200 03442510
Brite Voice Systems, Inc. (a) 119,700 2,364,075 11041110
DSC Communications Corp. (a) 444,900 16,016,400 23331110
Dialogic Corp. (a) 220,000 5,500,000 25249910
Ericsson (L.M.) Telephone Co.
Class B ADR 46,100 2,621,938 29482140
Filtronic Comtek PLC (a) 134,500 515,088 31799V22
Inter-Tel, Inc. (a) 226,400 2,575,300 45837210
Network Equipment Technologies (a) 129,500 3,286,063 64120810
SHARES VALUE (NOTE 1)
Newbridge Networks Corp. (a) 177,800 $ 6,022,975 65090110
Nokia Corp. AB sponsored ADR (a) 73,200 5,508,300 65490220
Nokia Corp. AB 19,700 2,949,396 65599910
Telco Systems, Inc. (a) 22,400 266,000 87890410
Tellabs, Inc. (a) 161,300 8,387,600 87966410
60,628,385
TELEPHONE INTERCONNECT SYSTEMS - 1.0%
General Instrument Corp. (a) 81,300 2,581,275 37012110
TOTAL COMMUNICATIONS EQUIPMENT 66,155,798
COMPUTER SERVICES & SOFTWARE - 4.0%
CAD/CAM/CAE - 1.4%
EIS International, Inc. (a) 235,400 3,648,700 26853910
PREPACKAGED COMPUTER SOFTWARE - 2.6%
Lotus Development Corp. (a) 44,400 1,853,700 54570010
Novell, Inc. (a) 139,500 2,835,774 67000610
Oracle Systems Corp. (a) 72,000 2,259,000 68389X10
6,948,474
TOTAL COMPUTER SERVICES & SOFTWARE 10,597,174
COMPUTERS & OFFICE EQUIPMENT - 3.3%
COMPUTER COMMUNICATIONS EQUIPMENT - 0.6%
Comverse Technology, Inc. (a) 140,000 1,540,000 20586240
COMPUTER PERIPHERALS - 0.8%
Micom Communication Corp. (a) 285,933 2,215,981 59478P10
MAINFRAME COMPUTERS - 0.9%
International Business Machines Corp. 30,000 2,257,500 45920010
MINI & MICRO COMPUTERS - 1.0%
Compaq Computer Corp. (a) 75,000 2,587,500 20449310
TOTAL COMPUTERS & OFFICE EQUIPMENT 8,600,981
CONGLOMERATES - 0.6%
Harris Corp. 34,500 1,552,500 41387510
ELECTRICAL EQUIPMENT - 7.0%
ELECTRICAL MACHINERY - 3.5%
Alcatel Alsthom sponsored ADR 123,000 1,998,750 01390430
Amphenol Corp. Class A (a) 176,500 4,346,313 03209420
Murata Manufacturing Co. Ord. 38,000 1,252,855 62699110
Philips Electronics NV 48,100 1,581,288 71833750
9,179,206
TV & RADIO COMMUNICATION EQUIPMENT - 3.5%
California Microwave Corp. (a) 59,800 1,749,150 13044210
Leitch Technology (a) 99,500 1,163,596 52543H10
Scientific-Atlanta, Inc. 216,100 5,051,338 80865510
Telular Corp. (a) 48,700 493,088 87970T10
Vertex Communications Corp. (a) 49,500 693,000 92532010
9,150,172
TOTAL ELECTRICAL EQUIPMENT 18,329,378
ELECTRONICS - 8.6%
ELECTRONIC PARTS - WHOLESALE - 0.9%
ARC International Corp. (a) 481,200 1,443,600 00190510
Wholesale Cellular USA, Inc. (a) 64,300 892,163 96683P10
2,335,763
ELECTRONICS & ELECTRIC COMPONENTS - 3.9%
Allgon AB B Free shares 100,000 1,632,864 01899822
Hirose Electric Co. Ltd. 32,000 1,703,271 43354399
Kyocera Corp. 16,000 1,034,972 50155610
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
ELECTRONICS & ELECTRIC COMPONENTS - CONTINUED
Merix Corp. (a) 65,000 $ 1,584,375 59004910
Sanmina Corp. (a) 148,700 4,312,300 80090710
10,267,782
SEMICONDUCTORS - 3.8%
Analog Devices, Inc. (a) 90,900 2,283,863 03265410
Austria Mikro Systeme International (b) 27,500 2,309,802 05299B22
Intel Corp. 20,000 1,595,000 45814010
LSI Logic Corp. (a) 69,900 3,809,550 50216110
9,998,215
TOTAL ELECTRONICS 22,601,760
ENGINEERING - 0.5%
WATER & SEWER PIPES - 0.5%
MasTec, Inc. (a) 100,000 1,275,000 57632310
TELEPHONE SERVICES - 6.9%
ALC Communications Corp. (a) 86,900 2,563,550 00157530
AT&T Corp. 5,000 258,750 00195710
Ameritech Corp. 99,200 4,253,200 03095410
BellSouth Corp. 76,100 4,489,900 07986010
Pakistan Telecommunications Voucher
GDR (a)(b) 11,200 1,086,400 69584910
SBC Communications, Inc. 82,200 3,421,575 84533310
Telebras PN (Pfd. Reg.) 836,650 24,690 95499792
Telephone & Data Systems, Inc. 42,300 1,929,938 87943310
TOTAL TELEPHONE SERVICES 18,028,003
TOTAL COMMON STOCKS
(Cost $228,975,956) 240,359,462
REPURCHASE AGREEMENTS - 8.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08%
dated 2/28/95 due 3/1/95 $21,942,705 21,939,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $250,914,956) $ 262,298,462
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end,
the value of these securities amounted to $3,396,202 or 1.3% of net assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $549,663,608 and $546,172,639, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $181,128 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $16,231,000 and $3,648,600,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 78.4%
Canada 6.3
United Kingdom 5.1
Finland 3.2
Sweden 1.6
Japan 1.5
Others (individually less than 1%) 3.9
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $251,346,170. Net unrealized appreciation
aggregated $10,952,292, of which $19,945,594 related to appreciated
investment securities and $8,993,302 related to depreciated investment
securities.
The fund hereby designates $2,764,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
DEVELOPING COMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $21,939,000) (cost $250,914,956) - See $ 262,298,462
accompanying schedule
Cash 889
Receivable for investments sold 17,840,219
Receivable for fund shares sold 1,096,318
Dividends receivable 11,250
Redemption fees receivable 740
Other receivables 91,331
TOTAL ASSETS 281,339,209
LIABILITIES
Payable for investments purchased $ 15,182,055
Payable for fund shares redeemed 11,374,151
Accrued management fee 139,026
Other payables and accrued expenses 218,338
TOTAL LIABILITIES 26,913,570
NET ASSETS $ 254,425,639
Net Assets consist of:
Paid in capital $ 221,265,637
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 21,776,496
Net unrealized appreciation (depreciation) on investments 11,383,506
NET ASSETS, for 12,468,823 $ 254,425,639
shares outstanding
NET ASSET VALUE and redemption price per share ($254,425,639 (divided by) 12,468,823 shares) $20.40
Maximum offering price per share (100/97.00 of $20.40) $21.03
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 707,113
Dividends
Interest 919,670
TOTAL INCOME 1,626,783
EXPENSES
Management fee $ 1,383,242
Transfer agent 1,833,314
Fees
Redemption fees (134,533
)
Accounting fees and expenses 223,703
Non-interested trustees' compensation 1,890
Custodian fees and expenses 60,390
Registration fees 93,893
Audit 34,920
Legal 3,701
Interest 4,140
Reports to shareholders 11,033
Miscellaneous 1,667
Total expenses before reductions 3,517,360
Expense reductions (50,458 3,466,902
)
NET INVESTMENT INCOME (LOSS) (1,840,119
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 30,223,359
Foreign currency transactions (20,991 30,202,368
)
Change in net unrealized appreciation (depreciation) on investment securities (4,667,340
)
NET GAIN (LOSS) 25,535,028
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 23,694,909
OTHER INFORMATION $1,273,859
Sales Charges Paid to FDC
Deferred sales charges withheld $6,404
by FDC
Exchange fees withheld by FSC $99,579
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (1,840,119 $ (1,552,126
Net investment income (loss) ) )
Net realized gain (loss) 30,202,368 27,786,284
Change in net unrealized appreciation (depreciation) (4,667,340 9,550,677
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 23,694,909 35,784,835
Distributions to shareholders from net realized gains (19,859,395 (12,078,883
) )
Share transactions 296,420,644 326,209,686
Net proceeds from sales of shares
Reinvestment of distributions 19,590,893 11,939,467
Cost of shares redeemed (287,865,261 (223,354,110
) )
Paid in capital portion of redemption fees 334,629 225,044
Net increase (decrease) in net assets resulting from share transactions 28,480,905 115,020,087
TOTAL INCREASE (DECREASE) IN NET ASSETS 32,316,419 138,726,039
NET ASSETS
Beginning of period 222,109,220 83,383,181
End of period (including accumulated net investment loss of $0 and $(276), respectively) $ 254,425,639 $ 222,109,220
OTHER INFORMATION
Shares
Sold 15,233,264 17,423,530
Issued in reinvestment of distributions 1,085,216 685,710
Redeemed (15,155,323 (11,874,788
) )
Net increase (decrease) 1,163,157 6,234,452
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEAR JUNE 29, 1990
FEBRUARY 28, ENDED ENDED (COMMENCEMEN
FEBRUARY 28, APRIL 30, T OF OPERATIONS
TO) APRIL 30,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 19.65 $ 16.44 $ 13.54 $ 11.95 $ 10.00
Income from Investment Operations
Net investment income (loss) (.16) (.16) (.07) (.08) E (.10)
Net realized and unrealized gain (loss) 2.55 4.82 2.98 2.42 1.86
Total from investment operations 2.39 4.66 2.91 2.34 1.76
Less Distributions (1.67) (1.47) (.03) (.79) -
From net realized gain
Redemption fees added to paid in capital .03 .02 .02 .04 .19
Net asset value, end of period $ 20.40 $ 19.65 $ 16.44 $ 13.54 $ 11.95
TOTAL RETURN B, C 13.63% 30.24% 21.66% 21.41% 19.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 254,426 $ 222,109 $ 83,383 $ 39,261 $ 7,745
Ratio of expenses to average net assets 1.56% 1.56% 1.88% A 2.50% 2.50% A
Ratio of expenses to average net assets before expense reductions 1.58% 1.56% 1.88% A 2.50% 3.29% A
Ratio of net investment income (loss) to average net assets (.83)% (.88)% (.59)% (.61)% (1.23)%
A A
Portfolio turnover rate 266% 280% 77% A 25% 469% A
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.06 PER SHARE.
ELECTRONICS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
ELECTRONICS 12.05% 170.86% 134.30%
ELECTRONICS
(INCL. 3% SALES CHARGE) 8.69% 162.74% 127.27%
S&P 500 7.36% 71.20% 246.77%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on July 29, 1985. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
ELECTRONICS 12.05% 22.05% 9.28%
ELECTRONICS
(INCL. 3% SALES CHARGE) 8.69% 21.31% 8.93%
S&P 500 7.36% 11.35% 13.84%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Electronics (Standard & Poor's 50
07/29/85 9700.00 10000.00
07/31/85 9544.80 9926.31
08/31/85 10126.80 9841.93
09/30/85 9030.70 9533.88
10/31/85 8982.20 9974.35
11/30/85 10078.30 10658.59
12/31/85 10776.70 11174.46
01/31/86 10883.40 11237.04
02/28/86 11096.80 12077.57
03/31/86 10883.40 12751.50
04/30/86 11775.80 12607.41
05/31/86 10854.30 13278.12
06/30/86 9797.00 13502.52
07/31/86 8623.30 12747.73
08/31/86 9360.50 13693.61
09/30/86 8322.60 12561.15
10/31/86 8351.70 13285.93
11/30/86 8351.70 13608.78
12/31/86 8206.20 13261.75
01/31/87 9564.20 15048.11
02/28/87 10330.50 15642.51
03/31/87 10165.60 16094.58
04/30/87 10466.30 15951.34
05/31/87 10252.90 16090.11
06/30/87 10029.80 16902.66
07/31/87 10340.20 17759.63
08/31/87 11087.10 18422.06
09/30/87 11077.40 18018.62
10/31/87 7313.80 14137.41
11/30/87 6169.20 12972.49
12/31/87 7100.40 13959.69
01/31/88 6693.00 14547.40
02/29/88 7401.10 15225.31
03/31/88 7294.40 14754.84
04/30/88 7624.20 14918.62
05/31/88 7362.30 15048.41
06/30/88 8080.10 15739.14
07/31/88 7585.40 15679.33
08/31/88 6828.80 15146.23
09/30/88 6935.50 15791.46
10/31/88 6431.10 16230.46
11/30/88 6111.00 15998.37
12/31/88 6499.00 16278.34
01/31/89 6731.80 17469.91
02/28/89 6634.80 17034.91
03/31/89 6586.30 17431.83
04/30/89 7100.40 18336.54
05/31/89 7779.40 19079.17
06/30/89 7013.10 18970.42
07/31/89 7090.70 20683.44
08/31/89 7333.20 21088.84
09/30/89 7536.90 21002.38
10/31/89 7197.40 20515.12
11/30/89 7216.80 20933.63
12/31/89 7517.50 21436.04
01/31/90 7769.70 19997.68
02/28/90 8390.50 20255.65
03/31/90 8797.90 20792.42
04/30/90 8836.70 20272.61
05/31/90 10136.50 22249.19
06/30/90 10291.70 22097.90
07/31/90 9806.70 22027.18
08/31/90 8274.10 20035.93
09/30/90 7022.80 19060.18
10/31/90 6770.60 18978.22
11/30/90 7469.00 20204.21
12/31/90 7954.10 20767.91
01/31/91 9061.26 21673.39
02/28/91 9857.64 23223.04
03/31/91 10382.09 23785.03
04/30/91 10440.36 23842.12
05/31/91 10780.28 24872.10
06/30/91 9469.16 23732.96
07/31/91 10119.86 24838.91
08/31/91 10537.48 25427.59
09/30/91 9731.38 25002.95
10/31/91 10207.27 25337.99
11/30/91 9585.70 24316.87
12/31/91 10760.85 27098.72
01/31/92 12033.12 26594.68
02/29/92 12693.53 26940.42
03/31/92 11693.20 26415.08
04/30/92 11469.82 27191.68
05/31/92 11489.25 27324.92
06/30/92 10654.02 26917.78
07/31/92 11217.31 28018.72
08/31/92 11333.86 27444.33
09/30/92 11741.76 27768.18
10/31/92 12625.55 27865.36
11/30/92 13451.06 28815.57
12/31/92 13713.29 29170.00
01/31/93 14179.46 29415.03
02/28/93 13868.68 29815.08
03/31/93 14354.28 30444.17
04/30/93 14101.25 29707.43
05/31/93 15516.25 30503.58
06/30/93 15799.25 30592.05
07/31/93 16248.15 30469.68
08/31/93 17643.64 31624.48
09/30/93 17936.40 31380.97
10/31/93 17594.85 32030.56
11/30/93 17458.22 31726.27
12/31/93 18112.47 32110.15
01/31/94 19363.59 33201.90
02/28/94 20281.84 32302.13
03/31/94 20063.75 30893.75
04/30/94 20006.36 31289.19
05/31/94 19948.97 31802.34
06/30/94 18881.51 31023.18
07/31/94 19271.76 32040.74
08/31/94 21154.18 33354.41
09/30/94 20545.83 32537.23
10/31/94 21383.74 33269.31
11/30/94 21108.26 32057.65
12/31/94 21223.04 32533.06
01/31/95 20614.70 33376.64
02/28/95 22727.00 34677.33
Let's say you invested $10,000 in Fidelity Select Electronics Portfolio on
July 29, 1985, when the fund started, and paid a 3% sales charge. By
February 28, 1995, your investment would have grown to $22,727 - a 127.27%
increase. That compares to $10,000 invested in the S&P 500, which would
have grown to $34,677 over the same period - a 246.77% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Micron Technology, Inc. 10.1
Applied Materials, Inc. 5.2
Texas Instruments, Inc. 4.9
Xilinx, Inc. 3.3
Intel Corp. 3.2
KLA Instruments Corp. 2.9
Compaq Computer Corp. 2.6
International Business Machines Corp. 2.5
LSI Logic Corp. 2.4
Asyst Technologies, Inc. 1.9
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 30.7
Row: 1, Col: 2, Value: 3.6
Row: 1, Col: 3, Value: 3.6
Row: 1, Col: 4, Value: 4.6
Row: 1, Col: 5, Value: 12.7
Row: 1, Col: 6, Value: 44.8
Semiconductors 44.8%
Semi-conductor Capital
Equipment 12.7%
Prepackaged Computer
Software 4.6%
Electronic Equipment 3.6%
Mini & Micro Computers 3.6%
All Others 30.7%*
* INCLUDES SHORT-TERM INVESTMENTS
ELECTRONICS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of
Fidelity Select Electronics Portfolio
Q. HARRY, HOW DID THE FUND PERFORM?
A. It's been a volatile, but ultimately rewarding year for the fund's
shareholders. For the 12 months ended February 28, 1995, the fund had a
total return of 12.05%. That topped the S&P 500, which returned 7.36%
during the same period.
Q. IS THE FUND'S RECENT SUCCESS TIED TO THE CONTINUED GOOD HEALTH OF THE
PERSONAL COMPUTER INDUSTRY?
A. To a large extent, yes. More than half of the fund's investments are in
semiconductor companies or related businesses. And these stocks generally
have risen over the past year on the strength of PC sales. In addition,
computers are requiring larger and more powerful chips, which also is
helping drive the industry. Any talk of semiconductors inevitably gets
around to supply and demand. Although demand has been very strong, many
have been worried that excess capacity, or supply, was coming on line too
quickly, which could dampen chip prices. But that simply hasn't happened.
The Koreans and Japanese are investing more heavily than others in new
semiconductor plants. However, my estimates show they're growing capacity
at a yearly rate of only about 25% to 30%, which is not that fast compared
to projections of worldwide demand.
Q. WON'T SUPPLY CATCH UP TO DEMAND AT SOME POINT?
A. Sure. It is a cyclical business with ups and downs. However, I think the
peak in semiconductor sales that many analysts were expecting in 1994 has
been pushed back at least a year. And, because of tight control of orders
and inventory, the next downturn should not be as severe.
Q. WHICH STOCKS HAD THE BIGGEST IMPACT ON THE FUND'S PERFORMANCE?
A. Micron Technology - the fund's largest investment at the end of February
- - has done very well. The company is one of the few makers of memory chips
known as dynamic RAMS. And it manufactures these chips more efficiently
than its overseas competitors. Earnings have remained strong and Micron's
stock price is up 133% from 12 months ago. Other semiconductor stocks that
have helped boost the fund's performance recently include Altera, LSI Logic
and Xilinx. Strong semiconductor demand also has helped KLA Instruments,
which manufactures the equipment used to make computer chips. For those
semiconductor stocks that didn't do as well, there was usually a specific
reason why.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Sure. Intel ran into some trouble in late 1994. A relatively obscure
flaw was discovered in its flagship Pentium microprocessor, and the company
took some heat for how it handled the situation. However, the Pentium has
gained wide acceptance, the PR problem appeared short-lived, and the stock
bounced back strongly in January and February. Texas Instruments' stock
remained relatively flat due to worries that too much of the company's
income is from royalties, and is at risk due to an adverse court ruling in
Japan. I'm concerned about that as well, but not enough to keep me away
from the stock, which has been very cheap. Finally, some of the fund's
foreign semiconductor stocks - Samsung in Korea and United Micro in Taiwan
- - suffered from the fall in emerging market stocks following Mexico's
devaluation of the peso.
Q. LOOKING BEYOND THE SEMICONDUCTOR COMPANIES, COMPAQ COMPUTER AND IBM ALSO
APPEAR AMONG THE FUND'S TOP 10 INVESTMENTS AT THE END OF FEBRUARY . . .
A. And I'm optimistic about both. IBM's stock has risen steadily over the
past year on the strength of improving profit margins. Compaq's stock has
been flat to down recently, but that's allowed me to buy it at attractive
valuations - prices relative to earnings. Investors have been jittery about
the company's upcoming launch of a new product line. While I share some of
those concerns, the stock was simply too inexpensive to ignore.
Q. YOU SOUND GENERALLY OPTIMISTIC ABOUT THE ENTIRE FUND OVER NEXT SIX
MONTHS . . .
A. I am. Due to the supply and demand situation for semiconductors, I
expect we could see strong earnings from the fund's companies over the next
six to 12 months. But while stock prices tend to follow earnings over the
long term, there always can be short-term corrections. These stocks have
shown strength recently, which is cause for concern. While I don't think
they're terribly expensive yet, semiconductor stocks almost never enjoy a
20% to 30% run up without some sort of downward move. If shareholders are
prepared for the inevitable ups and downs, I think they'll be rewarded over
the long haul.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1995, more than
$216 million
MANAGER: Harry Lange, since January 1994;
manager, Fidelity Select Technology Portfolio,
since 1993; Fidelity Select Computers
Portfolio, since 1992; research director,
Fidelity Investments Far East, 1988-1992;
manager, Fidelity Select Capital Goods and
Automation and Machinery Portfolios,
1988; joined Fidelity in 1987
(checkmark)
ELECTRONICS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.8%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 2.4%
DATACOMMUNICATIONS EQUIPMENT - 0.3%
General DataComm Industries, Inc. (a) 15,000 $ 315,000 36948710
US Robotics, Inc. 5,467 295,210 91246610
610,210
TELEPHONE EQUIPMENT - 2.1%
Natural Microsystems (a) 69,000 1,035,000 63888210
Network Equipment Technologies (a) 50,500 1,281,438 64120810
Newbridge Networks Corp. (a) 9,000 304,875 65090110
Nokia Corp. AB sponsored ADR (a) 15,000 1,128,750 65490220
Perceptron, Inc. (a) 52,300 967,550 71361F10
4,717,613
TOTAL COMMUNICATIONS EQUIPMENT 5,327,823
COMPUTER SERVICES & SOFTWARE - 5.8%
CAD/CAM/CAE - 0.7%
Brooktrout Technology (a) 13,600 214,200 11458010
Chipcom Corp. (a) 10,000 445,000 16961710
Integrated Silicon Systems, Inc. (a) 500 13,625 45812Q10
Structural Dynamics Research Corp. (a) 126,700 934,413 86355510
1,607,238
COMPUTER & SOFTWARE STORES - 0.3%
Inacom Corp. (a) 18,200 163,800 45323G10
MicroAge, Inc. (a) 58,450 569,888 59492810
733,688
COMPUTER RELATED SERVICES- 0.0%
Wave Systems Corp. Class A (a) 26,700 66,750 94352610
COMPUTER SERVICES - 0.0%
CompuCom Systems, Inc. (a) 15,000 50,625 20478010
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.2%
Softdesk, Inc. (a) 22,500 483,750 83402010
PREPACKAGED COMPUTER SOFTWARE - 4.6%
Geoworks (a) 106,600 879,450 37369210
Globalink, Inc. (a) 131,900 1,417,925 37936V10
Informix Corp. (a) 40,000 1,510,000 45677910
Infosoft International, Inc. (a) 30,000 1,267,500 45678310
Learning Co. (a) 10,000 297,500 52200610
LEGENT Corp. (a) 10,000 290,000 52465R10
Lotus Development Corp. (a) 63,000 2,630,250 54570010
Media Logic, Inc. (a) 15,000 32,813 58441B10
Microsoft Corp. (a) 13,000 819,000 59491810
Novell, Inc. (a) 20,000 406,563 67000610
Softkey International, Inc. (a) 24,100 614,550 83402N10
10,165,551
TOTAL COMPUTER SERVICES & SOFTWARE 13,107,602
COMPUTERS & OFFICE EQUIPMENT - 11.7%
COMPUTER EQUIPMENT - WHOLESALE - 1.0%
GBC Technologies, Inc. (a) 99,700 747,750 36149F10
Merisel, Inc. (a) 50,000 262,500 58984910
Southern Electronics Corp. (a) 20,000 107,500 84281110
Tech Data Corp. (a) 88,500 1,144,969 87823710
2,262,719
COMPUTER PERIPHERALS - 0.4%
Fore Systems, Inc. (a) 10,000 367,500 34544910
Komag, Inc. (a) 19,100 482,275 50045310
Radius, Inc. (a) 10,000 95,000 75047020
944,775
COMPUTER RENTAL & LEASING - 0.8%
Comdisco, Inc. 65,800 1,677,900 20033610
SHARES VALUE (NOTE 1)
COMPUTER STORAGE DEVICES - 1.5%
ADAPTEC, Inc. (a) 28,500 $ 940,500 00651F10
Exabyte (a) 26,300 496,413 30061510
Hutchinson Technology, Inc. (a) 32,200 909,650 44840710
Maxtor Corporation (a) 10,000 41,250 57772910
Read Rite Corp. (a) 50,000 800,000 75524610
Seagate Technology (a) 2,300 55,200 81180410
3,243,013
COMPUTERS & OFFICE EQUIPMENT - 0.0%
Hewlett-Packard Co. 400 46,000 42823610
ELECTRONIC COMPUTERS - 0.1%
Integrated Micro Products sponsored
ADR (a) 25,000 181,250 45812R10
GRAPHICS WORKSTATIONS - 1.8%
Silicon Graphics, Inc. (a) 30,200 1,045,675 82705610
Sun Microsystems, Inc. (a) 93,300 2,985,600 86681010
4,031,275
MAINFRAME COMPUTERS - 2.5%
International Business Machines Corp. 72,300 5,440,575 45920010
MINI & MICRO COMPUTERS - 3.6%
Compaq Computer Corp. (a) 168,900 5,827,050 20449310
Digital Equipment Corp. (a) 61,900 2,073,650 25384910
7,900,700
TOTAL COMPUTERS & OFFICE EQUIPMENT 25,728,207
CONSUMER ELECTRONICS - 0.5%
RADIOS, TELEVISIONS, STEREOS - 0.5%
Sony Corp. ADR 26,200 1,142,975 83569930
DEFENSE ELECTRONICS - 0.1%
Watkins-Johnson Co. 5,300 193,450 94248610
ELECTRICAL EQUIPMENT - 1.5%
ELECTRICAL EQUIPMENT - 1.1%
Fusion Systems Corp. (a) 100,000 2,400,000 36112910
ELECTRICAL MACHINERY - 0.4%
Murata Manufacturing Co. Ord. 30,100 992,393 62699110
TOTAL ELECTRICAL EQUIPMENT 3,392,393
ELECTRONIC INSTRUMENTS - 16.3%
ELECTRONIC EQUIPMENT - 3.6%
ASECO Corp. (a) 63,000 535,500 04365910
Credence Systems Corp. (a) 158,400 3,841,200 22530210
Megatest Corp. (a) 232,000 2,581,000 58495810
Micrion Corp. (a) 35,300 370,650 59479P10
Mosaid Technologies, Inc. (a) 7,500 55,998 61945Q10
Tektronix, Inc. 10,000 342,500 87913110
Teradyne, Inc. (a) 5,100 185,513 88077010
7,912,361
SEMICONDUCTOR CAPITAL EQUIPMENT - 12.7%
Applied Materials, Inc. (a) 250,300 11,545,088 03822210
Electro Scientific Industries, Inc. (a) 161,100 3,040,763 28522910
KLA Instruments Corp. (a) 109,500 6,351,000 48248010
Kulicke & Soffa Industries, Inc. (a) 10,700 260,813 50124210
Lam Research Corp. (a) 71,400 2,856,000 51280710
Silicon Valley Group, Inc. (a) 170,700 4,000,781 82706610
28,054,445
TOTAL ELECTRONIC INSTRUMENTS 35,966,806
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - 46.8%
CONNECTORS - 0.1%
Methode Electronics, Inc. Class A 20,000 $ 315,000 59152020
ELECTRONIC PARTS - WHOLESALE - 1.7%
Kent Electronics Corp. (a) 12,300 508,913 49055310
Marshall Industries (a) 16,100 418,600 57239310
Pioneer-Standard Electronics, Inc. 69,950 1,224,125 72387710
Sterling Electronics Corp. (a) 106,500 1,251,375 85928110
Wyle Laboratories 14,500 297,250 98305110
3,700,263
ELECTRONIC RESISTORS - 0.1%
Yageo Corp. GDR (b) 11,000 182,930 98432610
ELECTRONICS & ELECTRONIC COMPONENTS - 2.4%
CTS Corp. 4,500 135,000 12650110
Cirrus Logic, Inc. (a) 60,000 2,017,500 17275510
Kyocera Corporation 20,000 1,287,789 50155610
Microsemi Corp. (a) 50,000 231,250 59513710
Photronics, Inc. (a) 6,200 198,400 71940510
Sanmina Corp. (a) 30,000 870,000 80090710
Toshiba Corp. 100,000 631,492 89149310
5,371,431
SEMICONDUCTORS - 42.5%
Advanced Micro Devices, Inc. (a) 87,673 2,663,067 00790310
Alliance Semiconductor Corp. (a) 50,000 1,912,500 01877H10
Altera Corp. (a) 56,000 3,185,000 02144110
Analog Devices, Inc. (a) 79,900 2,007,488 03265410
Atmel Corp. (a) 61,500 2,098,688 04951310
Burr-Brown Corp. (a) 25,000 334,375 12257410
Cypress Semiconductor Corp. (a) 10,100 286,588 23280610
Cyrix Corp. 50,000 1,168,750 23281510
Electroglas, Inc. (a) 58,300 2,251,838 28532410
Geotek Industries, Inc. (a) 40,000 280,000 37365410
Information Storage Devices (a) 600 12,750 45675310
Integrated Device Technology, Inc. (a) 22,000 838,750 45811810
Integrated Silicon Solution (a) 100,000 2,850,000 45812P10
Intel Corp. 90,000 7,177,500 45814010
International Rectifier Corp. (a) 4,000 97,000 46025410
Interpoint Corp. (a) 10,000 86,250 46062710
LSI Logic Corp. (a) 97,300 5,302,850 50216110
Lattice Semiconductor Corp. (a) 63,000 1,661,625 51841510
Linear Technology Corp. 31,100 1,694,950 53567810
Logic Devices, Inc. (a) 30,000 112,500 54140210
Micro Linear Corp. (a) 36,400 350,350 59485010
Microchip Technology, Inc. (a) 54,900 1,386,225 59501710
Micron Technology, Inc. 361,800 22,431,600 59511210
National Semiconductor Corp. (a) 214,500 3,619,688 63764010
Quality Semiconductor, Inc. (a) 127,000 1,524,000 74758B10
SGS-Thomson Microelectronic NV (a) 102,700 2,567,500 78421310
S-3, Inc. (a) 100,800 1,839,600 78484910
Samsung Electronics Co. Ltd.:
GDR (a)(b) 2,447 151,714 79605030
GDS (a)(b) 43,475 1,652,050 79605020
GDS (Reg.) (non-vtg.) (a) 64,100 2,435,800 79611093
Tencor Instruments (a) 8,800 418,000 88032310
Texas Instruments, Inc. 136,700 10,765,125 88250810
Tokyo Electron Ltd. 25,000 658,881 89499999
Uniphase Corp. (a) 13,700 239,750 90914910
VLSI Technology, Inc. 50,000 765,625 91827010
Xilinx, Inc. (a) 110,000 7,356,250 98391910
94,184,627
TOTAL ELECTRONICS 103,754,251
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - 3.3%
GENERAL INDUSTRIAL MACHINERY - 0.0%
Robotic Vision Systems, Inc. (a) 10,000 $ 62,500 77107410
SPECIAL INDUSTRIAL MACHINERY - 3.3%
Asyst Technologies, Inc. (a) 131,900 4,286,750 04648X10
Fuji Machine Manufacturing Co.
Ltd. Ord. 20,000 520,903 36099892
Gasonics International Corp. (a) 52,500 918,750 36727810
PRI Automation, Inc. (a) 27,500 495,000 69357H10
Tylan General, Inc. (a) 33,000 272,250 90216910
Veeco Instruments, Inc. (a) 70,000 708,750 92241710
7,202,403
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 7,264,903
LEASING & RENTAL - 0.0%
EQUIPMENT RENTAL & LEASING - 0.0%
Leasing Solutions, Inc. (a) 11,000 79,750 52211310
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
MAIL ORDER - 0.4%
Gateway 2000, Inc. (a) 50,000 918,750 36783310
STATIONERY & OFFICE SUPPLIES - WHOLESALE - 0.0%
Daisytek International Corp. (a) 1,000 17,750 23405310
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 936,500
SERVICES - 0.0%
ELECTRICAL REPAIR SHOPS - 0.0%
Cerplex Group, Inc. (a) 10,000 80,000 15691320
TOTAL COMMON STOCKS
(Cost $176,055,495) 196,974,660
CONVERTIBLE BONDS - 3.4%
PRINCIPAL
AMOUNT
COMPUTERS & OFFICE EQUIPMENT - 1.1%
COMPUTER STORAGE DEVICES - 0.2%
Maxtor Corporation 5 3/4%,
3/1/12 $ 1,000,000 525,000 577729AA
ELECTRONIC COMPUTERS - 0.7%
Acer, Inc. 4%, 6/10/01 630,000 1,537,200 004993AC
OFFICE EQUIPMENT - WHOLESALE - 0.2%
Kinpo Electronics, Inc. euro 3%,
7/21/01 540,000 402,300 4971269A
TOTAL COMPUTERS & OFFICE EQUIPMENT 2,464,500
ELECTRONICS - 2.3%
SEMICONDUCTORS - 2.3%
United Microelectronics Corp.
1 1/4%, 6/8/04 (b) 1,120,000 1,534,400 910873AA
United Microelectronics Corp.
1 1/4%, 6/8/04 euro 2,580,000 3,534,600 911993AB
5,069,000
TOTAL CONVERTIBLE BONDS
(Cost $8,092,172) 7,533,500
REPURCHASE AGREEMENTS - 7.8%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $17,208,906 $ 17,206,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $201,353,667) $ 221,714,160
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,521,094 or 1.6% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $433,178,811 and $291,318,374, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $138,231 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,308,100 and $2,404,700, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $11,441,000 and $4,121,750,
respectively. The weighted average interest rate paid was 4.4% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $203,375,914. Net unrealized appreciation
aggregated $18,338,246, of which $27,530,177 related to appreciated
investment securities and $9,191,931 related to depreciated investment
securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $7,516,000 which will expire on February 28, 2003.
ELECTRONICS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $17,206,000) (cost $201,353,667) - See $ 221,714,160
accompanying schedule
Cash 10,333
Receivable for investments sold 4,337,850
Receivable for fund shares sold 5,445,530
Dividends receivable 28,597
Interest receivable 70,298
Redemption fees receivable 812
Other receivables 70,740
TOTAL ASSETS 231,678,320
LIABILITIES
Payable for investments purchased $ 9,606,147
Payable for fund shares redeemed 2,963,999
Accrued management fee 99,745
Other payables and accrued expenses 171,192
Collateral on securities loaned, 2,404,700
at value
TOTAL LIABILITIES 15,245,783
NET ASSETS $ 216,432,537
Net Assets consist of:
Paid in capital $ 205,487,965
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (9,415,921
)
Net unrealized appreciation (depreciation) on investments 20,360,493
NET ASSETS, for 10,932,267 shares outstanding $ 216,432,537
NET ASSET VALUE and redemption price per share ($216,432,537 (divided by) 10,932,267 shares) $19.80
Maximum offering price per share (100/97.00 of $19.80) $20.41
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 579,202
Dividends
Interest (including security lending fees of $32,787) 551,532
TOTAL INCOME 1,130,734
EXPENSES
Management fee $ 967,445
Transfer agent 1,526,637
Fees
Redemption fees (202,515
)
Accounting and security lending fees 159,153
Non-interested trustees' compensation 1,410
Custodian fees and expenses 22,570
Registration fees 162,214
Audit 22,679
Legal 1,397
Interest 20,840
Reports to shareholders 3,941
Miscellaneous 1,012
Total expenses before reductions 2,686,783
Expense reductions (21,469 2,665,314
)
NET INVESTMENT INCOME (LOSS) (1,534,580
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (9,362,686
)
Foreign currency transactions 334 (9,362,352
)
Change in net unrealized appreciation (depreciation) on investment securities 8,764,347
NET GAIN (LOSS) (598,005
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,132,585
)
OTHER INFORMATION $2,406,616
Sales Charges Paid to FDC
Deferred sales charges withheld $6,916
by FDC
Exchange fees withheld by FSC $178,538
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (1,534,580 $ (283,946
Net investment income (loss) ) )
Net realized gain (loss) (9,362,352 10,940,991
)
Change in net unrealized appreciation (depreciation) 8,764,347 7,342,630
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (2,132,585 17,999,675
)
Distributions to shareholders from net realized gains - (6,751,718
)
Share transactions 612,603,897 234,477,570
Net proceeds from sales of shares
Reinvestment of distributions - 6,551,694
Cost of shares redeemed (506,775,203 (189,780,938
) )
Paid in capital portion of redemption fees 1,742,948 469,729
Net increase (decrease) in net assets resulting from share transactions 107,571,642 51,718,055
TOTAL INCREASE (DECREASE) IN NET ASSETS 105,439,057 62,966,012
NET ASSETS
Beginning of period 110,993,480 48,027,468
End of period $ 216,432,537 $ 110,993,480
OTHER INFORMATION
Shares
Sold 33,789,699 13,902,581
Issued in reinvestment of distributions - 431,270
Redeemed (29,140,209 (11,413,385
) )
Net increase (decrease) 4,649,490 2,920,466
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 17.67 $ 14.28 $ 11.81 $ 10.75 $ 9.11
Income from Investment Operations
Net investment income (.18) (.09) (.05) (.12) (.04)
Net realized and unrealized gain (loss) 2.11 E 6.09 2.33 1.00 1.53
Total from investment operations 1.93 6.00 2.28 .88 1.49
Less Distributions - - - - (.01)
From net investment income
From net realized gain - (2.75) - - -
Total distributions - (2.75) - - (.01)
Redemption fees added to paid in capital .20 .14 .19 .18 .16
Net asset value, end of period $ 19.80 $ 17.67 $ 14.28 $ 11.81 $ 10.75
TOTAL RETURN B, C 12.05% 46.24% 20.91% 9.86% 18.15%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 216,433 $ 110,993 $ 48,027 $ 34,222 $ 18,178
Ratio of expenses to average net assets 1.71% 1.67% 1.69% A 2.16% 2.26%
Ratio of expenses to average net assets before expense reductions 1.72% 1.67% 1.69% A 2.16% 2.26%
Ratio of net investment income to average net assets (.98)% (.52)% (.50)% (1.07)% (.45)%
A
Portfolio turnover rate 205% 163% 293% A 299% 268%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNT SHOWN FOR A SHARE OUTSTANDING DOES NOT CORRESPOND WITH THE
AGGREGATE NET GAIN (LOSS) ON INVESTMENTS FOR THE PERIOD ENDED DUE
TO THE TIMING OF SALES AND REPURCHASES OF FUND SHARES IN RELATION TO
FLUCTUATING MARKET VALUES OF THE INVESTMENTS OF THE FUND.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
SOFTWARE AND COMPUTER
SERVICES 1.97% 185.98% 378.68%
SOFTWARE AND COMPUTER
SERVICES (INCL. 3% SALES CHARGE) -1.09% 177.40% 364.32%
S&P 500 7.36% 71.20% 246.77%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on July 29, 1985. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
SOFTWARE AND COMPUTER SERVICES
1.97% 23.39% 17.73%
SOFTWARE AND COMPUTER
SERVICES (INCL. 3% SALES CHARGE) -1.09% 22.64% 17.35%
S&P 500 7.36% 11.35% 13.84%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select Software (028Standard & Poor's 50
07/29/85 9700.00 10000.00
07/31/85 9622.40 9926.31
08/31/85 9515.70 9841.93
09/30/85 8933.70 9533.88
10/31/85 9215.00 9974.35
11/30/85 10282.00 10658.59
12/31/85 10776.70 11174.46
01/31/86 11019.20 11237.04
02/28/86 11775.80 12077.57
03/31/86 11853.40 12751.50
04/30/86 12959.20 12607.41
05/31/86 13483.00 13278.12
06/30/86 13143.50 13502.52
07/31/86 11232.60 12747.73
08/31/86 12163.80 13693.61
09/30/86 11232.60 12561.15
10/31/86 12280.20 13285.93
11/30/86 12551.80 13608.78
12/31/86 12270.50 13261.75
01/31/87 14879.80 15048.11
02/28/87 16276.60 15642.51
03/31/87 16548.20 16094.58
04/30/87 16829.50 15951.34
05/31/87 16907.10 16090.11
06/30/87 16315.40 16902.66
07/31/87 16266.90 17759.63
08/31/87 17411.50 18422.06
09/30/87 17595.80 18018.62
10/31/87 12939.80 14137.41
11/30/87 11707.90 12972.49
12/31/87 13428.92 13959.69
01/31/88 13040.86 14547.40
02/29/88 14113.14 15225.31
03/31/88 14235.68 14754.84
04/30/88 14664.59 14918.62
05/31/88 14266.32 15048.41
06/30/88 15389.65 15739.14
07/31/88 14623.74 15679.33
08/31/88 13612.74 15146.23
09/30/88 14490.98 15791.46
10/31/88 13725.08 16230.46
11/30/88 13520.83 15998.37
12/31/88 14644.17 16278.34
01/31/89 15736.86 17469.91
02/28/89 15032.23 17034.91
03/31/89 14664.59 17431.83
04/30/89 16084.07 18336.54
05/31/89 16666.16 19079.17
06/30/89 15015.60 18970.42
07/31/89 14572.41 20683.44
08/31/89 15237.19 21088.84
09/30/89 15543.20 21002.38
10/31/89 15870.31 20515.12
11/30/89 16334.60 20933.63
12/31/89 16408.68 21436.04
01/31/90 15825.35 19997.68
02/28/90 16235.84 20255.65
03/31/90 16883.98 20792.42
04/30/90 16829.97 20272.61
05/31/90 18947.22 22249.19
06/30/90 19390.11 22097.90
07/31/90 17618.53 22027.18
08/31/90 15155.61 20035.93
09/30/90 13416.44 19060.18
10/31/90 13686.50 18978.22
11/30/90 15447.27 20204.21
12/31/90 16549.11 20767.91
01/31/91 18979.62 21673.39
02/28/91 20362.32 23223.04
03/31/91 21518.16 23785.03
04/30/91 21356.13 23842.12
05/31/91 21745.01 24872.10
06/30/91 20151.25 23732.96
07/31/91 21389.13 24838.91
08/31/91 23126.93 25427.59
09/30/91 22365.15 25002.95
10/31/91 23484.01 25337.99
11/30/91 20913.03 24316.87
12/31/91 24136.01 27098.72
01/31/92 28010.15 26594.68
02/29/92 28851.81 26940.42
03/31/92 27465.54 26415.08
04/30/92 26772.40 27191.68
05/31/92 27193.24 27324.92
06/30/92 25720.32 26917.78
07/31/92 27539.80 28018.72
08/31/92 25485.15 27444.33
09/30/92 27329.39 27768.18
10/31/92 29532.57 27865.36
11/30/92 32107.08 28815.57
12/31/92 32713.57 29170.00
01/31/93 34396.91 29415.03
02/28/93 34186.49 29815.08
03/31/93 34916.76 30444.17
04/30/93 34329.13 29707.43
05/31/93 38200.94 30503.58
06/30/93 40171.79 30592.05
07/31/93 38955.74 30469.68
08/31/93 41583.54 31624.48
09/30/93 42422.20 31380.97
10/31/93 42324.35 32030.56
11/30/93 41276.03 31726.27
12/31/93 43421.00 32110.15
01/31/94 44934.04 33201.90
02/28/94 45532.95 32302.13
03/31/94 40647.10 30893.75
04/30/94 40857.40 31289.19
05/31/94 36768.46 31802.34
06/30/94 33542.04 31023.18
07/31/94 35187.20 32040.74
08/31/94 39004.60 33354.41
09/30/94 40777.54 32537.23
10/31/94 43285.20 33269.31
11/30/94 42294.92 32057.65
12/31/94 43588.68 32533.06
01/31/95 42869.92 33376.64
02/28/95 46399.82 34677.33
Let's say you invested $10,000 in Fidelity Select Software and Computer
Services Portfolio on July 29, 1985, when the fund started, and paid a 3%
sales charge. By February 28, 1995, your investment would have grown to
$46,432 - a 364.32% increase. That compares to $10,000 invested in the S&P
500, which would have grown to $34,677 over the same period - a 246.77%
increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Oracle Systems Corp. 9.6
Novell, Inc. 8.9
Electronics for Imaging Incorporated 6.4
SunGard Data Systems, Inc. 6.0
Compaq Computer Corp. 5.6
Micron Technology, Inc. 5.3
Compuware Corp. 5.2
Microsoft Corp. 2.6
Lotus Development Corp. 2.5
Platinum Technology, Inc. 2.4
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 23.0
Row: 1, Col: 2, Value: 3.8
Row: 1, Col: 3, Value: 5.3
Row: 1, Col: 4, Value: 7.4
Row: 1, Col: 5, Value: 8.800000000000001
Row: 1, Col: 6, Value: 51.7
Prepackaged Computer
Software 53.9%
Mini & Micro Computers 8.8%
Computer Services 7.4%
Semiconductors 5.2%
Telephone Equipment 3.8%
All Others 20.9%*
* INCLUDES SHORT-TERM INVESTMENTS
SOFTWARE & COMPUTER SERVICES PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
John Hurley,
Portfolio Manager of
Fidelity Select Software and
Computer Services Portfolio
Q. HOW DID THE FUND DO OVER THE PAST YEAR, JOHN?
A. The fund fell significantly during the first six months of the period,
then rebounded over the past six months. For the 12 months ended February
28, 1995, the fund had a total return of 1.97%. That trailed the S&P 500,
which returned 7.36% during the same period. Over the past six months,
however, the fund was up four-fold over the S&P 500.
Q. WHAT ACCOUNTED FOR THESE WIDE SWINGS?
A. Although I've only been managing the fund since August, I can pass along
a couple of key reasons why the fund lagged. Early in 1994, the fund had a
significant investment in the stocks of computer networking companies such
as Cisco Systems, Cabletron, 3Com and Chipcom, which sell hubs, routers and
the like. These stocks plummeted in the spring of 1994 on fears of a
decline in business prospects - fears that turned out to be unfounded. In
addition, the fund's largest investment at that time, Cheyenne Software,
quickly lost half its value on the heels of very disappointing earnings.
However, as summer progressed into fall, the networking stocks recovered
nicely. My only regret is that the fund sold Cisco Systems before it
bounced back.
Q. WHAT FACTORS LED TO THE FUND'S STRONG PERFORMANCE IN THE SECOND HALF OF
THE YEAR?
A. As the networking stocks rose again, I began to take profits and thin
out the fund's investments. In addition, the fund's software stocks began
to improve later in the year. These stocks often go through a strange cycle
of performance. They tend to slump over the summer, when investors are
concerned about a seasonal slowdown in orders. But traditionally, earnings
are strong through the fall and winter and the stocks bounce back. There
are not always good reasons to back up why this happens, it just does. But
while software stocks trended upward over the past six months, they also
were quite volatile. The fund benefited from effective trading in and out
of these stocks.
Q. CAN YOU GIVE US SOME EXAMPLES?
A. Sure. Over the past 12 months, the stock price of relational database
software manufacturer Oracle Systems hasn't risen much, but it did go up
and down quite a bit. The company is capitalizing on the move from
mainframe computer systems to client-server set-ups - PCs tied together
through networks. Because I was a firm believer in the earnings prospects
of Oracle, I bought more shares when the price dipped. And by February 28,
the stock made up nearly 10% of the fund. Network software manufacturer
Novell is another such example. New management has effectively cut costs,
and the company's new products have been well received. The stock has
helped the fund quite a bit.
Q. WHERE ELSE DID YOU FIND OPPORTUNITIES?
A. Because it has been a difficult market due, in part, to rising interest
rates, I've had to employ a slightly different strategy. In more favorable
market conditions, stocks of companies with fast-growing earnings and high
valuations - prices relative to earnings - tend to perform well despite the
fact that they're expensive. But in this market, expensive stocks often
have fallen further than others at a hint of bad news. So recently I've
found some success taking a contrarian approach: focusing on cheap stocks
that either are disliked or little followed, but which I believe have
excellent prospects.
Q. SUCH AS?
A. Electronics for Imaging. The company makes a workstation that allows a
PC to print copies in color. Some investors shun the stock because they
think this product would be easy to replicate. Yet no one has succeeded in
doing that, and the company's earnings, and recently its stock price, have
kept rising. SunGard Data Systems is another little-followed company that
has helped the fund recently. SunGard provides disaster recovery services
for computers in the financial services industry. The company has faced
little competition and has generated a strong cash flow, which makes it an
attractive takeover candidate.
Q. LET'S LOOK TO THE FUTURE. WHAT DO YOU SEE WHEN YOU LOOK SIX MONTHS OUT?
A. I believe the fate of personal computer software stocks hinges on the
success of Microsoft's new Windows '95 product. If the product is shipped
on time in August - as I expect - and is a success, I think these stocks
will have an excellent second half of the year. If there's trouble,
Microsoft will most likely drag other PC software stocks down with it. On
the enterprise software side, the move from mainframe to client-server
architecture appears to be a decade-long event. And I think companies such
as Oracle, Sybase and Informix may continue to benefit from this trend.
Although I may trade in and out of these stocks as they become cheaper or
more expensive, all three could be solid long-term investments for the
fund.
FUND FACTS
START DATE: July 29, 1985
SIZE: as of February 28, 1995, more than
$236 million
MANAGER: John Hurley, since August 1994;
analyst, PC software, database software and
mainframe software industries, since 1994;
joined Fidelity in 1993
(checkmark)
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 88.1%
SHARES VALUE (NOTE 1)
COMMUNICATIONS EQUIPMENT - 7.2%
DATACOMMUNICATIONS EQUIPMENT - 3.4%
Cabletron Systems, Inc. (a) 98,000 $ 3,883,243 12692010
3Com Corp. (a) 85,800 4,472,325 88553510
8,355,568
TELEPHONE EQUIPMENT - 3.8%
DSC Communications Corp. (a) 102,000 3,672,000 23331110
Inter-Tel, Inc. (a) 203,100 2,310,263 45837210
Nokia Corp. Free shares 23,800 3,272,893 65599992
9,255,156
TOTAL COMMUNICATIONS EQUIPMENT 17,610,724
COMPUTER SERVICES & SOFTWARE - 62.8%
CAD/CAM/CAE - 2.4%
Ascend Communications, Inc. (a) 4,000 217,000 04349110
Computer Data Systems, Inc. 50,000 456,250 20501710
ECI Telecom Ltd. 100,000 1,525,000 26825810
Network Peripherals, Inc. (a) 100,000 2,325,000 64121R10
State of The Art, Inc. (a) 80,000 770,000 85730710
Stratacom, Inc. (a) 8,800 325,600 86268310
Viewlogic Systems, Inc. (a) 30,000 292,500 92672110
5,911,350
COMPUTER RELATED SERVICES - 0.0%
TGV Software, Inc. (a) 300 4800
COMPUTER SERVICES - 7.4%
SHL Systemhouse, Inc. (a) 546,000 3,276,000 78424R10
SunGard Data Systems, Inc. (a) 358,900 14,804,625 86736310
18,080,625
DATA PROCESSING - 1.3%
Ceridian Corp. (a) 75,800 2,387,700 15677T10
Investment Technology Group, Inc. (a) 106,000 702,250 46145010
3,089,950
PREPACKAGED COMPUTER SOFTWARE - 51.7%
Adobe Systems, Inc. 150,000 5,362,500 00724F10
Boole & Babbage, Inc. (a) 1,500 45,375 09858610
Computer Associates International, Inc. 66,300 3,779,100 20491210
Compuware Corp. (a) 350,000 12,862,500 20563810
EICON Technology Corp. (a) 221,200 1,890,360 28248F10
Electronics for Imaging, Inc. (a) 397,800 15,613,650 28608210
General Magic, Inc. (a) 89,400 1,631,550 37025310
Informix Corp. (a) 155,000 5,851,250 45677910
Lotus Development Corp. (a) 144,900 6,049,575 54570010
Manugistics Group, Inc. (a) 55,000 584,375 56501110
Mercury Interactive Group Corp. (a) 145,100 1,886,300 58940510
Microsoft Corp. (a) 100,000 6,300,000 59491810
Midisoft Corp. (a) 80,000 800,000 59741310
Novell, Inc. (a) 1,073,100 21,814,116 67000610
Oracle Systems Corp. (a) 750,000 23,531,250 68389X10
Peoplesoft, Inc. (a) 56,500 1,963,375 71271310
Platinum Technology, Inc. (a) 248,100 5,892,375 72764T10
Ross Systems P/P (a)(b) 763,333 3,244,165 77830392
SPSS, Inc. (a) 71,100 808,763 78462K10
Sanctuary Woods Multimedia Corp. (a) 53,300 149,595 79971E10
Sterling Software, Inc. (a) 100,000 3,612,500 85954710
Sybase, Inc. (a) 84,800 3,455,600 87113010
Xcellenet, Inc. (a) 3,000 81,375 98388R10
127,209,649
TOTAL COMPUTER SERVICES & SOFTWARE 154,296,374
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - 10.7%
COMPUTER STORAGE DEVICES - 1.9%
ADAPTEC, Inc. (a) 10,000 $ 330,000 00651F10
Read Rite Corp. (a) 50,000 800,000 75524610
Xylogics, Inc. (a) 147,800 3,399,400 98415210
4,529,400
MINI & MICRO COMPUTERS - 8.8%
Apple Computer, Inc. 50,000 1,975,000 03783310
Compaq Computer Corp. (a) 400,000 13,800,000 20449310
Dell Computer Corp. (a) 50,000 2,075,000 24702510
General Motors Corp. Class E 100,000 3,837,500 37044240
21,687,500
TOTAL COMPUTERS & OFFICE EQUIPMENT 26,216,900
ELECTRONICS - 6.7%
ELECTRONIC PARTS - WHOLESALE - 0.2%
ARC International Corp. (a) 133,500 400,500 00190510
ELECTRONICS & ELECTRONIC COMPONENTS - 1.3%
Sanmina Corp. (a) 109,200 3,166,800 80090710
SEMICONDUCTORS - 5.2%
Micron Technology, Inc. 208,400 12,920,800 59511210
TOTAL ELECTRONICS 16,488,100
RETAIL & WHOLESALE, MISCELLANEOUS - 0.4%
MUSIC, TV, & ELECTRONIC STORES - 0.4%
Best Buy Co., Inc. (a) 50,000 1,081,250 08651610
SECURITIES INDUSTRY - 0.0%
SECURITY & COMMODITY BROKERS - 0.0%
Kim Eng Holdings Ltd. 3 1/2% 90,600 57,544 49499D95
TELEPHONE SERVICES - 0.3%
ALC Communications Corp. (a) 26,200 772,900 00157530
TOTAL COMMON STOCKS
(Cost $186,323,947) 216,523,792
NONCONVERTIBLE PREFERRED STOCKS - 2.2%
COMPUTER SERVICES & SOFTWARE - 2.2%
PREPACKAGED COMPUTER SOFTWARE - 2.2%
Sap AG (Cost $3,089,260) 6,500 5,352,811 80899893
REPURCHASE AGREEMENTS - 9.7%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account, at 6.08% dated
2/28/95 due 3/1/95 $ 23,923,040 23,919,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $213,332,207) $ 245,795,603
LEGEND
1. Non-income producing
2. Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
Ross Systems P/P 1/4/95 $ 2,862,499
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $321,010,367 and $282,829,090, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $49,029 for the period (see
Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $2,223,450 and $2,354,900, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $2,092,000 and $1,470,154,
respectively. The weighted average interest rate paid was 4.7% (see Note 8
of Notes to Financial Statements).
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $213,934,092. Net unrealized appreciation
aggregated $31,861,511, of which $39,927,523 related to appreciated
investment securities and $8,066,012 related to depreciated investment
securities.
At February 28, 1995, the fund had a capital loss carryforward of
approximately $6,020,000 which will expire on February 28, 2003.
The fund has elected to defer to its fiscal year ending February 28, 1996
$1,988,000 of losses recognized during the period November 1, 1994 to
February 28, 1995.
SOFTWARE AND COMPUTER SERVICES PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $23,919,000) (cost $213,332,207) - See $ 245,795,603
accompanying schedule
Cash 416
Receivable for investments sold 8,955,984
Receivable for fund shares sold 3,389,488
Dividends receivable 39,418
Redemption fees receivable 1,513
Other receivables 109,749
TOTAL ASSETS 258,292,171
LIABILITIES
Payable for investments purchased $ 8,939,480
Payable for fund shares redeemed 10,154,267
Accrued management fee 121,247
Other payables and 277,191
accrued expenses
Collateral on securities loaned, 2,354,900
at value
TOTAL LIABILITIES 21,847,085
NET ASSETS $ 236,445,086
Net Assets consist of:
Paid in capital $ 212,481,359
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions (8,499,669
)
Net unrealized appreciation (depreciation) on investments 32,463,396
NET ASSETS, for 8,133,604 $ 236,445,086
shares outstanding
NET ASSET VALUE and redemption price per share ($236,445,086 (divided by) 8,133,604 shares) $29.07
Maximum offering price per share (100/97.00 of $29.07) $29.97
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 226,110
Dividends
Interest (including security lending 664,417
fees of $33,248)
TOTAL INCOME 890,527
EXPENSES
Management fee $ 1,132,169
Transfer agent 1,427,504
Fees
Redemption fees (144,281
)
Accounting and security lending fees 188,418
Non-interested trustees' compensation 2,204
Custodian fees and expenses 36,124
Registration fees 74,938
Audit 32,651
Legal 2,634
Interest 2,486
Reports to shareholders 8,542
Miscellaneous 1,359
Total expenses before reductions 2,764,748
Expense reductions (38,257 2,726,491
)
NET INVESTMENT INCOME (LOSS) (1,835,964
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities (7,444,187
)
Foreign currency transactions 62,064 (7,382,123
)
Change in net unrealized appreciation (depreciation) on investment securities 17,246,063
NET GAIN (LOSS) 9,863,940
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 8,027,976
OTHER INFORMATION $1,239,048
Sales Charges Paid to FDC
Deferred sales charges withheld $8,732
by FDC
Exchange fees withheld by FSC $100,725
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (1,835,964 $ (2,049,464
Net investment income (loss) ) )
Net realized gain (loss) (7,382,123 35,000,477
)
Change in net unrealized appreciation (depreciation) 17,246,063 10,379,359
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 8,027,976 43,330,372
Distributions to shareholders from net realized gains (2,015,425 (32,503,084
) )
Share transactions 367,638,603 412,354,230
Net proceeds from sales of shares
Reinvestment of distributions 1,989,953 32,019,820
Cost of shares redeemed (317,960,229 (429,424,876
) )
Paid in capital portion of redemption fees 730,383 1,045,419
Net increase (decrease) in net assets resulting from share transactions 52,398,710 15,994,593
TOTAL INCREASE (DECREASE) IN NET ASSETS 58,411,261 26,821,881
NET ASSETS
Beginning of period 178,033,825 151,211,944
End of period $ 236,445,086 $ 178,033,825
OTHER INFORMATION
Shares
Sold 14,345,417 14,575,603
Issued in reinvestment of distributions 80,950 1,265,940
Redeemed (12,454,413 (15,154,744
) )
Net increase (decrease) 1,971,954 686,799
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.89 $ 27.62 $ 21.63 $ 19.77 $ 15.58
Income from Investment Operations
Net investment income (loss) (.26) (.34) (.07) F (.28) (.14) E
Net realized and unrealized gain (loss) .67 7.92 5.88 4.37 4.06
Total from investment operations .41 7.58 5.81 4.09 3.92
Less Distributions (.33) (6.48) - (2.50) -
From net realized gain
Redemption fees added to paid in capital .10 .17 .18 .27 .27
Net asset value, end of period $ 29.07 $ 28.89 $ 27.62 $ 21.63 $ 19.77
TOTAL RETURN B, C 1.97% 33.19% 27.69% 25.36% 26.89%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 236,445 $ 178,034 $ 151,212 $ 89,571 $ 17,290
Ratio of expenses to average net assets 1.50% 1.57% 1.64% A 1.98% 2.50%
Ratio of expenses to average net assets before expense reductions 1.52% 1.57% 1.64% A 1.98% 2.82%
Ratio of net investment income (loss) to average net assets (1.01)% (1.19)% (.37)% (1.30)% (.84)%
A
Portfolio turnover rate 164% 376% 402% A 348% 326%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON
AVERAGE SHARES OUTSTANDING DURING THE PERIOD.
E INVESTMENT INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO
$.02 PER SHARE.
F INVESTMENT INCOME PER SHARE REFLECTS DIVIDENDS RECEIVED IN ARREARS FROM
UNISYS CORP., WHICH AMOUNTED TO $.03 PER SHARE.
TECHNOLOGY PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
TECHNOLOGY 4.61% 168.36% 147.86%
TECHNOLOGY
(INCL. 3% SALES CHARGE) 1.47% 160.31% 140.42%
S&P 500 7.36% 71.20% 274.70%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or ten years. You
can compare these figures to the performance of the S&P 500 - a common
proxy for the U.S. stock market. This benchmark includes reinvested
dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 PAST 10
FEBRUARY 28, 1995 YEAR YEARS YEARS
TECHNOLOGY 4.61% 21.83% 9.50%
TECHNOLOGY
(INCL. 3% SALES CHARGE) 1.47% 21.09% 9.17%
S&P 500 7.36% 11.35% 14.12%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER TEN YEARS
Select Technology (0Standard & Poor's 50
02/28/85 9700.01 10000.00
03/31/85 8877.83 10007.00
04/30/85 8209.29 9997.99
05/31/85 8342.17 10575.88
06/30/85 8361.55 10741.92
07/31/85 8751.45 10725.81
08/31/85 8391.22 10634.64
09/30/85 7764.00 10301.77
10/31/85 7980.14 10777.71
11/30/85 8848.92 11517.07
12/31/85 9319.34 12074.49
01/31/86 9412.58 12142.11
02/28/86 10031.32 13050.34
03/31/86 10052.51 13778.55
04/30/86 10565.31 13622.85
05/31/86 10238.98 14347.59
06/30/86 9603.29 14590.06
07/31/86 8372.42 13774.48
08/31/86 8793.60 14796.54
09/30/86 8015.06 13572.87
10/31/86 8474.53 14356.02
11/30/86 8810.61 14704.87
12/31/86 8623.43 14329.90
01/31/87 10231.54 16260.14
02/28/87 11388.71 16902.41
03/31/87 10742.06 17390.89
04/30/87 11052.62 17236.11
05/31/87 11303.62 17386.07
06/30/87 10967.53 18264.06
07/31/87 11078.15 19190.05
08/31/87 11729.05 19905.84
09/30/87 11788.61 19469.90
10/31/87 7640.69 15276.09
11/30/87 6645.19 14017.34
12/31/87 7607.79 15084.06
01/31/88 7197.52 15719.09
02/29/88 7911.03 16451.60
03/31/88 7826.30 15943.25
04/30/88 8125.08 16120.22
05/31/88 7902.11 16260.46
06/30/88 8629.00 17006.82
07/31/88 7986.84 16942.19
08/31/88 7251.03 16366.16
09/30/88 7447.25 17063.36
10/31/88 7139.55 17537.72
11/30/88 6925.49 17286.93
12/31/88 7402.65 17589.45
01/31/89 8000.22 18877.00
02/28/89 7781.71 18406.96
03/31/89 7639.00 18835.84
04/30/89 8191.97 19813.42
05/31/89 8860.89 20615.87
06/30/89 8076.03 20498.36
07/31/89 8218.73 22349.36
08/31/89 8397.11 22787.41
09/30/89 8597.78 22693.98
10/31/89 8535.35 22167.48
11/30/89 8557.65 22619.69
12/31/89 8660.21 23162.57
01/31/90 8481.84 21608.36
02/28/90 8958.99 21887.11
03/31/90 9378.18 22467.12
04/30/90 8954.54 21905.44
05/31/90 10109.53 24041.22
06/30/90 10198.72 23877.74
07/31/90 9654.67 23801.33
08/31/90 8339.13 21649.69
09/30/90 7630.08 20595.35
10/31/90 7848.60 20506.79
11/30/90 9025.89 21831.53
12/31/90 9569.94 22440.63
01/31/91 11184.25 23419.04
02/28/91 11750.60 25093.50
03/31/91 12691.54 25700.76
04/30/91 12067.22 25762.44
05/31/91 12736.13 26875.38
06/30/91 11500.59 25644.49
07/31/91 12773.95 26839.52
08/31/91 13401.66 27475.62
09/30/91 13468.91 27016.78
10/31/91 13832.09 27378.80
11/30/91 13379.24 26275.44
12/31/91 15213.46 29281.34
01/31/92 15792.04 28736.71
02/29/92 16038.72 29110.29
03/31/92 14764.95 28542.64
04/30/92 14549.66 29381.79
05/31/92 14693.19 29525.76
06/30/92 13642.76 29085.83
07/31/92 14337.87 30275.44
08/31/92 13603.59 29654.79
09/30/92 14269.33 30004.72
10/31/92 15111.30 30109.74
11/30/92 16335.08 31136.48
12/31/92 16540.68 31519.46
01/31/93 17044.88 31784.22
02/28/93 16946.97 32216.49
03/31/93 17167.26 32896.25
04/30/93 17118.02 32100.16
05/31/93 18844.99 32960.45
06/30/93 19765.31 33056.03
07/31/93 19240.18 32923.81
08/31/93 20268.78 34171.62
09/30/93 20582.77 33908.50
10/31/93 20176.75 34610.41
11/30/93 19981.86 34281.61
12/31/93 21279.58 34696.42
01/31/94 22350.98 35876.09
02/28/94 22982.82 34903.85
03/31/94 22208.12 33382.04
04/30/94 21760.84 33809.33
05/31/94 21795.15 34363.81
06/30/94 19948.39 33521.89
07/31/94 20720.26 34621.41
08/31/94 22904.35 36040.89
09/30/94 22789.99 35157.89
10/31/94 23641.90 35948.94
11/30/94 23316.01 34639.68
12/31/94 23647.62 35153.39
01/31/95 22727.10 36064.91
02/28/95 24030.69 37470.36
Let's say you invested $10,000 in Fidelity Select Technology Portfolio on
February 28, 1985, and paid a 3% sales charge. By February 28, 1995, your
investment would have grown to $24,042 - a 140.42% increase. That compares
to $10,000 invested in the S&P 500, which would have grown to $37,470 over
the same period - a 274.70% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Compaq Computer Corp. 6.4
International Business Machines Corp. 5.4
Oracle Systems Corp. 5.1
Micron Technology, Inc. 4.8
Digital Equipment Corp. 4.2
Cisco Systems, Inc. 3.3
Informix Corp. 3.1
Sun Microsystems, Inc. 2.9
LSI Logic Corp. 2.5
Texas Instruments, Inc. 2.5
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 38.9
Row: 1, Col: 2, Value: 6.0
Row: 1, Col: 3, Value: 6.4
Row: 1, Col: 4, Value: 12.5
Row: 1, Col: 5, Value: 17.0
Row: 1, Col: 6, Value: 19.2
Semiconductors 19.2%
Prepackaged Computer
Software 17.0%
Mini & Micro Computers 12.5%
Mainframe Computers 6.4%
Datacommunications
Equipment 6.0%
All Others 38.9%
TECHNOLOGY PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
Harry Lange,
Portfolio Manager of
Fidelity Select Technology Portfolio
Q. HARRY, HOW HAS THE FUND PERFORMED OVER THE PAST YEAR?
A. For the 12 months ended February 28, 1995, the fund had a total return
of 4.61%. That compared to a 7.36% return for the S&P 500 during the same
period.
Q. WHY DID THE FUND UNDERPERFORM THE BROAD MARKET
OVER THE YEAR?
A. Most of the trouble came early in 1994. As the stock market corrected
when interest rates spiked upward, technology stocks fell harder. First, a
few key technology companies reported earnings figures that fell below
analysts' expectations. Second, investors were worried about a potential
summer slowdown in product orders. However, through the fall and winter,
earnings came in consistently strong. That helped technology stocks
outperform the broad market over the past six months and technology stocks
rebounded.
Q. WHAT FACTORS BOOSTED EARNINGS, AND WHICH COMPANIES
BENEFITED?
A. While the prices of technology stocks fluctuate more than most, the
underlying story behind them remains positive. On the corporate side,
companies worldwide continue to improve productivity through technology. On
the consumer side, the love affair with personal computers and related
products currently shows no signs of letting up. And since PCs are the
cornerstone of the industry, strong demand for them helps most technology
companies. For example, hardware companies such as Digital Equipment are
showing improving profit margins. In addition, high demand for computer
workstations has helped Sun Microsystems string together a few quarters of
strong earnings. And continued high demand for semiconductors and memory
chips has boosted the stocks of companies such as LSI Logic and Micron
Technology, which rose 175% and 133% over the past 12 months, respectively.
Q. WHAT ABOUT COMPAQ COMPUTER - THE FUND'S LARGEST INVESTMENT AT THE END OF
FEBRUARY?
A. Though a solid company, Compaq's stock has been flat to down recently
due to concerns about future earnings. The company will be launching a new
line of products in 1995, and investors are cautious. I agree that some
caution is warranted, but I think Compaq's stock price already reflects a
lot of downside risk. I recently added significantly to the fund's
investment when the stock reached historically cheap levels.
Q. HOW DOES IBM FIT INTO THE PC STORY?
A. For the most part, it hasn't yet. IBM's personal computer division has
struggled, but I believe is showing signs of turning around. Nevertheless,
the stock has been one of the fund's top performers over the past year. The
company's mainframe computer business is going gangbusters. Orders are
backlogged several months. And because IBM has significantly reduced
internal costs, profit margins are rising.
Q. IN THE PAST YOU'VE TALKED ABOUT THE TREND IN BUSINESS AWAY FROM
MAINFRAME COMPUTERS TOWARD CLIENT-SERVER ARRANGEMENTS - PERSONAL COMPUTERS
TIED TOGETHER THROUGH NETWORKS. HOW DOES THAT SQUARE WITH IBM'S SUCCESS?
A. First, the progression into client-server architecture is gradual, and
will continue over several years. In the meantime, there's a strong demand
among mainframe users to increase their computers' processing power, which
has helped mainframe companies such as IBM. That said, the fund has
benefited from the growth of client-server set-ups. Oracle, which makes the
software used in these systems, is growing earnings at roughly a 50% annual
rate. The stock slowed recently when it became quite expensive, but I'm
very optimistic about Oracle over the long run.
Q. WHICH STOCK PICKS DIDN'T WORK OUT AS YOU HAD HOPED?
A. A slump in international markets has helped drag down the stocks of
Korean semiconductor manufacturer Samsung, and Taiwanese chip maker United
Micro and PC maker Acer, despite strong earnings. In addition,
disappointing earnings due to increased competition has hurt U.S.-based
personal computer distributors such as Tech Data and Merisel.
Q. WILL THIS POSITIVE MOMENTUM CONTINUE?
A. The Christmas season was excellent for PCs, and there's been no letdown
since. Judging from the supply/demand characteristics of the market, I
think technology companies are more likely to see more positive earnings
surprises than disappointments over the next six months. That said, these
stocks can be very sensitive to economic swings. If the U.S. economy slows
enough to negatively impact earnings growth, the fund will most likely
correct harder than the broad stock market.
FUND FACTS
START DATE: July 14, 1981
SIZE: as of February 28, 1995, more than
$229 million
MANAGER: Harry Lange, since 1993; manager,
Fidelity Select Electronics Portfolio, since
January 1994; Fidelity Select Computers
Portfolio, since 1992; research director,
Fidelity Investments Far East, 1988-1992;
manager, Fidelity Select Capital Goods and
Automation and Machinery Portfolios, 1988;
joined Fidelity in 1987
(checkmark)
TECHNOLOGY PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.3%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 0.1%
AIRCRAFT & PARTS - 0.1%
Hong Kong Aircraft & Engineering Co. 50,000 $ 161,018 43899410
AUTOS, TIRES, & ACCESSORIES - 0.0%
AUTO & TRUCK PARTS - 0.0%
Allen Group, Inc. (The) 2,400 56,400 01763410
BROADCASTING - 0.7%
CABLE TV OPERATORS - 0.0%
NTN Communications, Inc. (a) 3,800 25,175 62941030
TELEVISION BROADCASTING - 0.7%
Scandinavian Broadcasting Corp. (a) 60,000 1,440,000 80699E92
TOTAL BROADCASTING 1,465,175
CELLULAR - 0.1%
CELLULAR & COMMUNICATION SERVICES - 0.1%
Advanced Information Services
(For. Reg.) 7,500 100,441 00799793
Millicom International Cellular SA (a) 2,800 76,300 60081492
176,741
COMMUNICATIONS EQUIPMENT - 8.6%
DATACOMMUNICATIONS EQUIPMENT - 6.0%
Broadband Technologies, Inc. (a) 20,000 480,000 11130910
Cabletron Systems, Inc. (a) 49,000 1,941,625 12692010
Cisco Systems, Inc. (a) 215,900 7,286,625 17275R10
General DataComm Industries, Inc. (a) 15,000 315,000 36948710
Network General Corp. (a) 127,500 3,394,688 64121010
13,417,938
TELEPHONE EQUIPMENT - 2.6%
Global Village Communication (a) 20,000 240,000 37935Q10
Natural Microsystems (a) 28,800 432,000 63888210
Network Equipment Technologies (a) 121,300 3,077,988 64120810
Newbridge Networks Corp. (a) 41,000 1,388,875 65090110
Perceptron, Inc. (a) 30,400 562,400 71361F10
Teledata Communications Ltd. (a) 7,300 43,800 93799992
5,745,063
TOTAL COMMUNICATIONS EQUIPMENT 19,163,001
COMPUTER SERVICES & SOFTWARE - 21.4%
CAD/CAM/CAE - 2.8%
Brooktrout Technology (a) 17,900 281,925 11458010
Chipcom Corp. (a) 29,300 1,303,850 16961710
Integrated Silicon Systems, Inc. (a) 5,000 136,250 45812Q10
Network Peripherals, Inc. (a) 14,300 332,475 64121R10
Parametric Technology Corp. (a) 10,000 382,500 69917310
Structural Dynamics Research Corp. (a) 515,800 3,804,025 86355510
6,241,025
COMPUTER & SOFTWARE STORES - 1.3%
Inacom Corp. (a) 37,300 335,700 45323G10
MicroAge, Inc. (a) 238,000 2,320,500 59492810
Software Spectrum, Inc. (a) 8,000 148,000 83396010
2,804,200
COMPUTER RELATED SERVICES - 0.0%
Wave Systems Corp. Class A (a) 43,300 108,250 94352610
COMPUTER SERVICES - 0.0%
CompuCom Systems, Inc. (a) 8,400 28,350 20478010
CUSTOM COMPUTER PROGRAMMING SERVICES - 0.3%
Softdesk, Inc. (a) 35,000 752,500 83402010
SHARES VALUE (NOTE 1)
ELECTRONIC INFORMATION RETRIEVAL - 0.0%
Data Broadcasting Corp. (a) 15,000 $ 63,750 23759610
Quickresponse Services, Inc. (a) 1,500 24,000 74837W10
87,750
PREPACKAGED COMPUTER SOFTWARE - 17.0%
Acclaim Entertainment, Inc. (a) 20,000 285,000 00432520
Autodesk, Inc. 10,000 392,500 05276910
Brock Control Systems, Inc. (a) 82,400 515,000 11162610
Broderbund Software, Inc. (a) 10,000 518,750 11201410
Corel Systems Corp. (a) 158,700 2,169,983 21868Q10
Delrina Corp. (a) 10,000 143,932 24735L10
EICON Technology Corp. (a) 21,000 179,465 28248F10
FTP Software, Inc. (a) 34,900 959,750 30266010
Fourth Shift Corp. (a) 54,000 162,000 35112810
Fourth Dimension Software (a) 38,000 171,000 35199792
Geoworks (a) 106,800 881,100 37369210
Globalink, Inc. (a) 162,600 1,747,950 37936V10
Informix Corp. (a) 186,000 7,021,500 45677910
Infosoft International, Inc. (a) 14,200 599,950 45678310
Learning Co. (a) 7,500 223,125 52200610
Lotus Development Corp. (a) 20,000 835,000 54570010
MDL Information Systems, Inc. (a) 16,000 170,000 55267R10
Media Logic, Inc. (a) 65,000 142,188 58441B10
Microsoft Corp. (a) 32,100 2,022,300 59491810
Midisoft Corp. (a) 40,000 400,000 59741310
Novell, Inc. (a) 201,400 4,094,085 67000610
Oracle Systems Corp. (a) 365,700 11,473,838 68389X10
Platinum Technology, Inc. (a) 4,000 95,000 72764T10
Softkey International, Inc. (a) 45,200 1,152,600 83402N10
Sybase, Inc. (a) 28,200 1,149,150 87113010
Tulip Computers NV 20,000 240,332 89917799
Wonderware Corp. (a) 9,300 259,819 97817910
38,005,317
TOTAL COMPUTER SERVICES & SOFTWARE 48,027,392
COMPUTERS & OFFICE EQUIPMENT - 30.2%
COMPUTER EQUIPMENT - 0.1%
Stratus Computer, Inc. (a) 12,000 316,500 86315510
COMPUTER EQUIPMENT - WHOLESALE - 1.2%
GBC Technologies, Inc. (a) 206,000 1,545,000 36149F10
Merisel, Inc. (a) 140,000 735,000 58984910
Tech Data Corp. (a) 24,700 319,556 87823710
2,599,556
COMPUTER PERIPHERALS - 1.0%
Fore Systems, Inc. (a) 20,000 735,000 34544910
Komag, Inc. (a) 23,800 600,950 50045310
Liuski International, Inc. (a) 2,500 11,250 53802910
Plannar Systems, Inc. (a) 5,000 101,250 72690010
Radius, Inc. (a) 79,150 751,925 75047020
Western Digital Corp. (a) 3,900 58,500 95810210
2,258,875
COMPUTER RENTAL & LEASING - 0.3%
Comdisco, Inc. 23,300 594,150 20033610
COMPUTER STORAGE DEVICES - 1.1%
Ameriquest Technologies, Inc. (a) 19,142 52,641 03070P10
Hutchinson Technology, Inc. (a) 30,000 847,500 44840710
Maxtor Corp. (a) 100,000 412,500 57772910
Pinnacle Micro, Inc. (a) 84,500 1,119,625 72346910
Seagate Technology (a) 3,400 81,600 81180410
2,513,866
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
COMPUTERS & OFFICE EQUIPMENT - CONTINUED
COMPUTERS & OFFICE EQUIPMENT - 2.0%
Data General Corp. (a) 120,000 $ 945,000 23768810
Fujitsu Ltd. 50,000 455,791 35959010
Hewlett-Packard Co. 27,000 3,105,000 42823610
4,505,791
ELECTRONIC COMPUTERS - 0.8%
Bay Networks, Inc. (a) 50,000 1,568,750 07251010
TSL Holding, Inc. (a) 10,864 326 87291810
Tricord Systems, Inc. (a) 40,500 222,750 89612110
1,791,826
GRAPHICS WORKSTATIONS - 3.2%
Silicon Graphics, Inc. (a) 24,600 851,775 82705610
Sun Microsystems, Inc. (a) 201,500 6,448,000 86681010
7,299,775
MAINFRAME COMPUTERS - 6.4%
Amdahl Corp. (a) 193,100 2,148,238 02390510
Control Data Systems, Inc. (a) 5,000 35,625 21238F10
International Business Machines Corp. 160,800 12,100,200 45920010
14,284,063
MINI & MICRO COMPUTERS - 12.5%
AST Research, Inc. (a) 52,300 836,800 00190710
Apple Computer, Inc. 50,000 1,975,000 03783310
Compaq Computer Corp. (a) 413,900 14,279,550 20449310
Digital Equipment Corp. (a) 281,100 9,416,850 25384910
Pyramid Technology Corp. (a) 41,400 657,225 74723610
Tandem Computers, Inc. (a) 50,000 850,000 87537010
28,015,425
OFFICE AUTOMATION - 0.3%
Filenet Corp. (a) 3,500 109,375 31686910
Xerox Corp. 5,000 554,375 98412110
663,750
PENS, PENCILS, OFFICE SUPPLIES - 1.3%
International Imaging Materials, Inc. (a) 99,700 2,866,375 45968C10
TOTAL COMPUTERS & OFFICE EQUIPMENT 67,709,952
CONSUMER ELECTRONICS - 0.2%
RADIOS, TELEVISIONS, STEREOS - 0.2%
Foster Electric Co. Ltd. 40,000 236,474 34999192
Odetics, Inc. Class A (a) 57,000 285,000 67606520
521,474
DEFENSE ELECTRONICS - 0.0%
Stanford Telecommunications, Inc. (a) 200 2,900 85440210
DRUGS & PHARMACEUTICALS - 3.9%
BIOTECHNOLOGY - 1.4%
Amgen, Inc. (a) 10,000 690,000 03116210
Applied Immune Sciences, Inc. (a) 1,100 5,913 03820F10
COR Therapeutics, Inc. (a) 110,000 1,485,000 21775310
Genentech, Inc. (redeemable) (a) 20,000 1,005,000 36871020
3,185,913
DRUGS - 2.5%
A.L. Laboratories, Inc. Class A 5,000 101,875 00162910
Pfizer, Inc. 20,000 1,655,000 71708110
Schering-Plough Corp. 30,000 2,351,250 80660510
Warner-Lambert Co. 20,000 1,527,500 93448810
Watson Pharmaceuticals, Inc. (a) 400 10,325 94268310
5,645,950
TOTAL DRUGS & PHARMACEUTICALS 8,831,863
SHARES VALUE (NOTE 1)
ELECTRICAL EQUIPMENT - 0.3%
ELECTRICAL EQUIPMENT - 0.0%
IEC Electronics Corp. (a) 5,000 $ 42,500 44949L10
ELECTRICAL MACHINERY - 0.0%
General Signal (warrants) (a) 1 1 37083899
TV & RADIO COMMUNICATION EQUIPMENT - 0.3%
Avid Technology, Inc. (a) 12,000 402,000 05367P10
Leitch Technology (a) 20,000 233,889 52543H10
635,889
TOTAL ELECTRICAL EQUIPMENT 678,390
ELECTRONIC INSTRUMENTS - 4.3%
ELECTRONIC EQUIPMENT - 1.9%
ASECO Corp. (a) 15,000 127,500 04365910
Credence Systems Corp. (a) 100,500 2,437,125 22530210
GenRad, Inc. (a) 41,500 243,813 37244710
Megatest Corp. (a) 43,000 478,375 58495810
Micrion Corp. (a) 30,700 322,350 59479P10
Micro Component Technology, Inc. (a) 600 1,575 59479Q10
Teradyne, Inc. (a) 20,000 727,500 88077010
4,338,238
SEMICONDUCTOR CAPITAL EQUIPMENT - 2.4%
Applied Materials, Inc. (a) 3,300 152,213 03822210
Electro Scientific Industries, Inc. (a) 32,300 609,663 28522910
KLA Instruments Corp. (a) 39,100 2,267,800 48248010
Kulicke & Soffa Industries, Inc. (a) 10,800 263,250 50124210
Lam Research Corp. (a) 18,400 736,000 51280710
Silicon Valley Group, Inc. (a) 58,100 1,361,719 82706610
5,390,645
TOTAL ELECTRONIC INSTRUMENTS 9,728,883
ELECTRONICS - 18.6%
CONNECTORS - 0.1%
Thomas & Betts Corp. 2,000 133,250 88431510
ELECTRONIC PARTS - WHOLESALE - 0.3%
Pioneer-Standard Electronics, Inc. 5,100 89,250 72387710
Sterling Electronics Corp. (a) 40,000 470,000 85928110
559,250
ELECTRONIC RESISTORS - 0.1%
Yageo Corp. GDR (a)(b) 11,000 182,930 98432610
ELECTRONICS & ELECTRONIC COMPONENTS - 0.7%
CTS Corp. 2,800 84,000 12650110
GTI Corp. (a) 20,000 210,000 36236010
Hitachi Ltd. ADR 10,800 938,250 43357850
Photronics, Inc. (a) 1,700 54,400 71940510
Toshiba Corp. 50,000 315,746 89149310
1,602,396
SEMICONDUCTORS - 17.4%
Advanced Micro Devices, Inc. (a) 124,200 3,772,575 00790310
Altera Corp. (a) 6,400 364,000 02144110
Atmel Corp. (a) 1,500 51,188 04951310
Electroglas, Inc. (a) 20,000 772,500 28532410
Geotek Industries, Inc. (a) 99,000 693,000 37365410
Information Storage Devices (a) 600 12,750 45675310
Integrated Device Technology, Inc. (a) 2,600 99,125 45811810
Intel Corp. 20,000 1,595,000 45814010
International Rectifier Corp. (a) 6,000 145,500 46025410
Interpoint Corp. (a) 10,000 86,250 46062710
LSI Logic Corp. (a) 101,500 5,531,750 50216110
Lattice Semiconductor Corp. (a) 30,000 791,250 51841510
Linear Technology Corp. 20,000 1,090,000 53567810
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
ELECTRONICS - CONTINUED
SEMICONDUCTORS- CONTINUED
Micro Linear Corp. (a) 40,700 $ 391,738 59485010
Micron Technology, Inc. 175,000 10,850,000 59511210
National Semiconductor Corp. (a) 35,500 599,063 63764010
Quality Semiconductor, Inc. (a) 2,000 24,000 74758B10
SGS-Thomson Microelectronic NV (a) 67,400 1,685,000 78421310
Samsung Electronics Co. Ltd.:
GDR (a)(b) 4,258 263,996 79605030
GDS (a)(b) 102,775 3,905,450 79605020
GDS (Reg.) (non-vtg.) (a) 11,800 448,400 79611093
Siliconix, Inc. (a) 600 7,350 82707920
Tencor Instruments (a) 4,700 223,250 88032310
Texas Instruments, Inc. 69,400 5,465,250 88250810
Uniphase Corp. (a) 17,000 297,500 90914910
39,165,885
TOTAL ELECTRONICS 41,643,711
INDUSTRIAL MACHINERY & EQUIPMENT - 2.2%
GENERAL INDUSTRIAL MACHINERY - 0.0%
Robotic Vision Systems, Inc. (a) 15,000 93,750 77107410
SPECIAL INDUSTRIAL MACHINERY - 2.2%
Asyst Technologies, Inc. (a) 79,500 2,583,750 04648X10
Fuji Machine Manufacturing Co. Ltd. Ord. 50,000 1,302,259 36099892
Gasonics International Corp. (a) 10,000 175,000 36727810
PRI Automation, Inc. (a) 20,000 360,000 69357H10
Tylan General, Inc. (a) 57,000 470,250 90216910
4,891,259
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 4,985,009
MEDICAL EQUIPMENT & SUPPLIES - 1.3%
MEDICAL SUPPLIES & APPLIANCES - 0.6%
Healthdyne, Inc. (a) 25,000 237,500 42220310
Johnson & Johnson 17,300 981,775 47816010
Medical Technology Systems, Inc. (a) 9,800 66,150 58462R50
1,285,425
MEDICAL TECHNOLOGY - 0.7%
Mallinckrodt Group, Inc. 11,900 389,725 56122610
Medtronic, Inc. 20,000 1,200,000 58505510
1,589,725
TOTAL MEDICAL EQUIPMENT & SUPPLIES 2,875,150
MEDICAL FACILITIES MANAGEMENT - 0.5%
HOME HEALTH CARE AGENCIES - 0.1%
Abbey Healthcare Group, Inc. (a) 375 10,641 00278610
Homedco Group, Inc. (a) 5,900 265,500 43739A10
276,141
HOSPITALS - 0.4%
Columbia/HCA Healthcare Corp. 5,404 223,591 19767710
Health Management Associates, Inc.
Class A (a) 19,575 521,184 42193310
744,775
HOSPITALS, GENERAL MEDICAL - 0.0%
Charter Medical Corp. (a) 5,000 91,875 16124170
TOTAL MEDICAL FACILITIES MANAGEMENT 1,112,791
SHARES VALUE (NOTE 1)
RETAIL & WHOLESALE, MISCELLANEOUS - 1.9%
MAIL ORDER - 1.9%
Gateway 2000, Inc. (a) 90,000 $ 1,653,750 36783310
Micro Warehouse, Inc. (a) 87,400 2,512,750 59501B10
4,166,500
STATIONARY & OFFICE SUPPLIES - WHOLESALE - 0.0%
Daisytek International Corp. (a) 1,000 17,750 23405310
TOTAL RETAIL & WHOLESALE, MISCELLANEOUS 4,184,250
SERVICES - 0.0%
ELECTRICAL REPAIR SHOPS - 0.0%
Cerplex Group, Inc. (a) 10,000 80,000 15691320
JEWELRY, SILVERWARE, & PLATED - 0.0%
Aurora Electronics (a) 7,000 30,188 05162910
TOTAL SERVICES 110,188
TELEPHONE SERVICES - 1.0%
MFS Communications, Inc. (a) 3,300 114,675 55272T10
Japan Telecom Co. Ltd. (b) 5 109,555 81799K23
SBC Communications, Inc. 10,000 416,250 84533310
Telebras PN (Pfd. Reg.) 48,000,000 1,416,578 95499792
US Long Distance Corp (a) 12,500 181,250 91191220
2,238,308
TOTAL COMMON STOCKS
(Cost $183,243,513) 213,672,596
NONCONVERTIBLE PREFERRED STOCKS - 0.8%
TELEPHONE SERVICES - 0.8%
Stet (Societa Finanziaria Telefonica) Spa
(Cost $1,121,566) 735,100 1,685,276 85982592
CONVERTIBLE BONDS - 3.9%
PRINCIPAL
AMOUNT
COMPUTER SERVICES & SOFTWARE - 0.0%
PREPACKAGED COMPUTER SOFTWARE - 0.0%
Sterling Software, Inc. 5 3/4%,
2/01/03 $ 62,000 82,150 859547AD
COMPUTERS & OFFICE EQUIPMENT - 2.1%
COMPUTERS & OFFICE EQUIPMENT - 0.3%
Data General Corp. 7 3/4%,
6/1/01 770,000 639,100 237688AD
ELECTRONIC COMPUTERS - 1.5%
Acer, Inc. 4%, 6/10/01 1,410,000 3,440,400 004993AC
OFFICE EQUIPMENT - WHOLESALE - 0.3%
Kinpo Electronics, Inc. 3%,
7/21/01 860,000 640,700 4971269A
TOTAL COMPUTERS & OFFICE EQUIPMENT 4,720,200
CONVERTIBLE BONDS - CONTINUED
PRINCIPAL VALUE (NOTE 1)
AMOUNT
ELECTRONICS - 1.8%
SEMICONDUCTORS - 1.8%
United Microelectronics Corp.:
euro 1 1/4%, 6/8/04 $ 1,995,000 $ 2,733,150 911993AB
1 1/4%,6/8/04 (b) 870,000 1,191,900 910873AA
3,925,050
TOTAL CONVERTIBLE BONDS
(Cost $9,369,349) 8,727,400
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $193,734,428) $ 224,085,272
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $5,653,831 or 2.5% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $235,943,772 and $201,461,712, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $110,367 for the period
(see Note 5 of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $12,443,000 and $4,735,538,
respectively. The weighted average interest rate paid was 4.7% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 87.9%
Free China 3.7
Korea 2.0
Canada 1.8
Japan 1.5
Others (individually less than 1%) 3.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $194,817,538. Net unrealized appreciation
aggregated $29,267,734 of which $43,416,429 related to appreciated
investment securities and $14,148,695 related to depreciated investment
securities.
The fund hereby designates $2,470,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
TECHNOLOGY PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (cost $193,734,428) - See accompanying schedule $ 224,085,272
Cash 263
Receivable for investments sold 12,912,468
Receivable for fund shares sold 1,405,280
Dividends receivable 110,379
Interest receivable 76,904
Redemption fees receivable 809
Other receivables 148,260
TOTAL ASSETS 238,739,635
LIABILITIES
Payable for investments purchased $ 1,173,009
Payable for fund shares redeemed 4,161,059
Accrued management fee 121,134
Notes payable 3,341,000
Other payables and accrued expenses 182,762
TOTAL LIABILITIES 8,978,964
NET ASSETS $ 229,760,671
Net Assets consist of:
Paid in capital $ 190,276,213
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 9,133,614
Net unrealized appreciation (depreciation) on investments 30,350,844
NET ASSETS, for 5,464,043 shares outstanding $ 229,760,671
NET ASSET VALUE and redemption price per share ($229,760,671 (divided by) 5,464,043 shares) $42.05
Maximum offering price per share (100/97.00 of $42.05) $43.35
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 790,160
Dividends
Interest 405,594
TOTAL INCOME 1,195,754
EXPENSES
Management fee $ 1,278,290
Transfer agent 1,725,783
Fees
Redemption fees (131,119
)
Accounting fees and expenses 206,675
Non-interested trustees' compensation 3,174
Custodian fees and expenses 30,650
Registration fees 46,057
Audit 34,069
Legal 2,919
Interest 16,168
Reports to shareholders 12,069
Miscellaneous 2,155
Total expenses before reductions 3,226,890
Expense reductions (14,681 3,212,209
)
NET INVESTMENT INCOME (LOSS) (2,016,455
)
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 11,171,783
Foreign currency transactions (13,975 11,157,808
)
Change in net unrealized appreciation (depreciation) on investment securities (4,708,436
)
NET GAIN (LOSS) 6,449,372
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 4,432,917
OTHER INFORMATION $1,145,527
Sales Charges Paid to FDC
Deferred sales charges withheld $25,706
by FDC
Exchange fees withheld by FSC $91,335
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ (2,016,455 $ (1,061,686
Net investment income (loss) ) )
Net realized gain (loss) 11,157,808 20,812,741
Change in net unrealized appreciation (depreciation) (4,708,436 26,720,283
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,432,917 46,471,338
Distributions to shareholders: - (436,840
From net investment income )
From net realized gain (7,172,823 (13,053,941
) )
TOTAL DISTRIBUTIONS (7,172,823 (13,490,781
) )
Share transactions 291,385,384 372,847,019
Net proceeds from sales of shares
Reinvestment of distributions 6,939,366 13,219,760
Cost of shares redeemed (269,114,732 (350,325,262
) )
Paid in capital portion of redemption fees 815,900 1,063,853
Net increase (decrease) in net assets resulting from share transactions 30,025,918 36,805,370
TOTAL INCREASE (DECREASE) IN NET ASSETS 27,286,012 69,785,927
NET ASSETS
Beginning of period 202,474,659 132,688,732
End of period $ 229,760,671 $ 202,474,659
OTHER INFORMATION
Shares
Sold 7,232,669 10,038,649
Issued in reinvestment of distributions 187,906 415,252
Redeemed (6,796,592 (9,446,149
) )
Net increase (decrease) 623,983 1,007,752
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 41.83 $ 34.62 $ 32.44 $ 27.06 $ 20.08
Income from Investment Operations
Net investment income (loss) (.39) (.24) E .13 F (.26) .14 G
Net realized and unrealized gain (loss) 1.95 11.04 4.68 5.56 6.46
Total from investment operations 1.56 10.80 4.81 5.30 6.60
Less Distributions - (.13) - - -
From net investment income
In excess of net investment income - - - (.16) -
From net realized gain (1.50) (3.70) (2.75) - -
Total distributions (1.50) (3.83) (2.75) (.16) -
Redemption fees added to paid in capital .16 .24 .12 .24 .38
Net asset value, end of period $ 42.05 $ 41.83 $ 34.62 $ 32.44 $ 27.06
TOTAL RETURN B, C 4.61% 35.62% 16.48% 20.57% 34.76%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 229,761 $ 202,475 $ 132,689 $ 105,954 $ 117,055
Ratio of expenses to average net assets 1.56% 1.54% 1.64% A 1.72% 1.83%
Ratio of expenses to average net assets before expense reductions 1.57% 1.55% 1.64% A 1.72% 1.83%
Ratio of net investment income (loss) to average net assets (.98)% (.65)% .52% A (.84)% .61%
Portfolio turnover rate 102% 213% 259% A 353% 442%
</TABLE>
A ANNUALIZED B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES
NOT BEEN REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS). C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND
FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED. D NET INVESTMENT
INCOME (LOSS) PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE SHARES
OUTSTANDING DURING THE PERIOD. E INVESTMENT INCOME PER SHARE REFLECTS
DIVIDEND RECEIVED IN ARREARS RECEIVED FROM UNISYS CORP. $3.75 SERIES A
WHICH AMOUNTED TO $.03 PER SHARE. F INVESTMENT INCOME PER SHARE REFLECTS
DIVIDEND RECEIVED IN ARREARS WHICH AMOUNTED TO $.10 PER SHARE. G INVESTMENT
INCOME PER SHARE REFLECTS A SPECIAL DIVIDEND WHICH AMOUNTED TO $.06 PER
SHARE AND $.20 PER SHARE RELATING TO A NONRECURRING INITIATIVE TO INVEST IN
DIVIDEND INCOME PRODUCING SECURITIES WHICH WAS IN EFFECT FOR A PORTION OF
1991.
TELECOMMUNICATIONS PORTFOLIO
PERFORMANCE AND INVESTMENT SUMMARY
PERFORMANCE
There are several ways to evaluate a fund's historical performance: total
percentage change in value, the average annual percentage change, or the
growth of a hypothetical $10,000 investment. Each performance figure
includes changes in a fund's share price, plus reinvestment of any
dividends (income) and capital gains (the profits the fund earns when it
sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
TELECOMMUNICATIONS 7.98% 96.60% 411.18%
TELECOMMUNICATIONS
(INCL. 3% SALES CHARGE) 4.74% 90.70% 395.84%
S&P 500 7.36% 71.20% 246.77%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on July 29, 1985. You can compare these figures to the performance
of the S&P 500 - a common proxy for the U.S. stock market. This benchmark
includes reinvested dividends and capital gains, if any.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
TELECOMMUNICATIONS 7.98% 14.48% 18.54%
TELECOMMUNICATIONS
(INCL. 3% SALES CHARGE) 4.74% 13.78% 18.16%
S&P 500 7.36% 11.35% 13.84%
AVERAGE ANNUAL RETURNS take the fund's actual (or cumulative) return and
show you what would have happened if the fund had performed at a constant
rate each year.
UNDERSTANDING PERFORMANCE
How a fund did yesterday is no guarantee of
how it will do tomorrow. The stock market, for
example, has a history of growth in the long run
and volatility in the short run. Unlike the broader
market, however, some sectors may not have
a history of growth in the long run. And, as
with all stock funds, the share price and
return of a fund that invests in a sector will
vary. That means if you sell your shares
during a sector downturn, you might lose
money. But if you can identify a sector that is
about to experience rapid growth you may
have the potential for above-average gains.
(checkmark)
$10,000 OVER LIFE OF FUND
Select TelecommunicaStandard & Poor's 50
07/29/85 9700.00 10000.00
07/31/85 9612.70 9926.31
08/31/85 9641.80 9841.93
09/30/85 9263.50 9533.88
10/31/85 9612.70 9974.35
11/30/85 10020.10 10658.59
12/31/85 10670.00 11174.46
01/31/86 10893.10 11237.04
02/28/86 11649.70 12077.57
03/31/86 11892.20 12751.50
04/30/86 12348.10 12607.41
05/31/86 12658.50 13278.12
06/30/86 12716.70 13502.52
07/31/86 12095.90 12747.73
08/31/86 12920.40 13693.61
09/30/86 12125.00 12561.15
10/31/86 12745.80 13285.93
11/30/86 12968.90 13608.78
12/31/86 12784.60 13261.75
01/31/87 14394.80 15048.11
02/28/87 15607.30 15642.51
03/31/87 15413.30 16094.58
04/30/87 15180.50 15951.34
05/31/87 15762.50 16090.11
06/30/87 16363.90 16902.66
07/31/87 16878.00 17759.63
08/31/87 17673.40 18422.06
09/30/87 18032.30 18018.62
10/31/87 14860.40 14137.41
11/30/87 13841.90 12972.49
12/31/87 14729.67 13959.69
01/31/88 15417.32 14547.40
02/29/88 15875.76 15225.31
03/31/88 15945.52 14754.84
04/30/88 16463.75 14918.62
05/31/88 16673.03 15048.41
06/30/88 17540.07 15739.14
07/31/88 17290.92 15679.33
08/31/88 16653.10 15146.23
09/30/88 17679.60 15791.46
10/31/88 18038.37 16230.46
11/30/88 18197.82 15998.37
12/31/88 18818.97 16278.34
01/31/89 20346.19 17469.91
02/28/89 20426.57 17034.91
03/31/89 21260.51 17431.83
04/30/89 22868.11 18336.54
05/31/89 24556.09 19079.17
06/30/89 23956.18 18970.42
07/31/89 25774.87 20683.44
08/31/89 26391.20 21088.84
09/30/89 27361.17 21002.38
10/31/89 26391.20 20515.12
11/30/89 27058.06 20933.63
12/31/89 28394.36 21436.04
01/31/90 25315.08 19997.68
02/28/90 25220.81 20255.65
03/31/90 25807.34 20792.42
04/30/90 24288.65 20272.61
05/31/90 26844.25 22249.19
06/30/90 26310.09 22097.90
07/31/90 25105.60 22027.18
08/31/90 22183.42 20035.93
09/30/90 20748.52 19060.18
10/31/90 21471.21 18978.22
11/30/90 22696.64 20204.21
12/31/90 23738.66 20767.91
01/31/91 24582.28 21673.39
02/28/91 25404.53 23223.04
03/31/91 26120.00 23785.03
04/30/91 26675.29 23842.12
05/31/91 26952.94 24872.10
06/30/91 25831.68 23732.96
07/31/91 27294.65 24838.91
08/31/91 28106.23 25427.59
09/30/91 28469.31 25002.95
10/31/91 29590.57 25337.99
11/30/91 28458.63 24316.87
12/31/91 31062.45 27098.72
01/31/92 31105.61 26594.68
02/29/92 31494.03 26940.42
03/31/92 30382.73 26415.08
04/30/92 31526.39 27191.68
05/31/92 31159.56 27324.92
06/30/92 30435.91 26917.78
07/31/92 32069.11 28018.72
08/31/92 31690.56 27444.33
09/30/92 32307.06 27768.18
10/31/92 32631.54 27865.36
11/30/92 34329.63 28815.57
12/31/92 35820.62 29170.00
01/31/93 35710.44 29415.03
02/28/93 37671.70 29815.08
03/31/93 39214.27 30444.17
04/30/93 39297.02 29707.43
05/31/93 40878.84 30503.58
06/30/93 42641.44 30592.05
07/31/93 43884.31 30469.68
08/31/93 47194.84 31624.48
09/30/93 47872.76 31380.97
10/31/93 49251.21 32030.56
11/30/93 45217.56 31726.27
12/31/93 46464.95 32110.15
01/31/94 47405.63 33201.90
02/28/94 45920.34 32302.13
03/31/94 44484.56 30893.75
04/30/94 45278.56 31289.19
05/31/94 45012.66 31802.34
06/30/94 44974.68 31023.18
07/31/94 47469.05 32040.74
08/31/94 48849.19 33354.41
09/30/94 48279.41 32537.23
10/31/94 50583.85 33269.31
11/30/94 47899.55 32057.65
12/31/94 48471.83 32533.06
01/31/95 49144.34 33376.64
02/28/95 49584.05 34677.33
Let's say you invested $10,000 in Fidelity Select Telecommunications
Portfolio on July 29, 1985, when the fund started, and paid a 3% sales
charge. By February 28, 1995, your investment would have grown to $49,584 -
a 395.84% increase. That compares to $10,000 invested in the S&P 500, which
would have grown to $34,677 over the same period - a 246.77% increase.
INVESTMENT SUMMARY
TOP TEN STOCKS AS OF FEBRUARY 28, 1995
% OF FUND'S
INVESTMENTS
Ameritech Corp. 6.5
SBC Communications, Inc. 6.2
Nokia Corp. 6.0
Bell Atlantic Corp. 4.4
Ericsson (L.M.) Telephone Co. 3.9
Viacom, Inc. 3.8
ALC Communications Corp. 3.8
BellSouth Corp. 3.7
Koninklijke PPT Nederland 3.6
NYNEX Corp. 2.8
TOP INDUSTRIES AS OF FEBRUARY 28, 1995
Row: 1, Col: 1, Value: 24.5
Row: 1, Col: 2, Value: 2.1
Row: 1, Col: 3, Value: 4.3
Row: 1, Col: 4, Value: 7.2
Row: 1, Col: 5, Value: 12.1
Row: 1, Col: 6, Value: 49.8
Telephone Services 49.8%
Telephone Equipment 12.1%
Cellular & Communication
Services 7.2%
Cable TV Operators 4.3%
Semiconductors 2.1%
All Others 24.5%*
* INCLUDES SHORT-TERM INVESTMENTS
TELECOMMUNICATIONS PORTFOLIO
FUND TALK: THE MANAGER'S OVERVIEW
David Felman,
Portfolio Manager of
Fidelity Select Telecommunications Portfolio
Q. HOW DID THE FUND PERFORM, DAVID?
A. The fund's performance has been mixed, with results improving in the
second half of the period. For the 12 months ended February 28, 1995, the
fund returned 7.98%, slightly ahead of the S&P 500's 7.36% return.
Q. WHAT DROVE THE IMPROVEMENTS IN THE SECOND HALF?
A. Wireless communications - the cellular phone operators and particularly
the wireless equipment manufacturers - was the key to the fund's strong
second-half performance. I increased the fund's investments in these areas
during the year, and they continue to show great growth potential. Wireless
equipment has been an amazing growth industry and should continue to do
very well. Nokia, Ericsson and Motorola, which produce cellular equipment,
each made strong contributions to overall fund performance for the period.
Q. WHAT'S BEEN HAPPENING IN THE OTHER PARTS OF THE INDUSTRY?
A. The telecommunications industry is in the process of a dramatic
reshaping. Previously protected markets have begun to open up, new markets
and technology-based products have begun to be created, and as a result,
competition among the many different players in the industry has started to
intensify. Within this environment, some segments of the industry have not
been performing as well as others. The domestic long distance companies,
for example, generally have been weak. Their core business has come under
some pressure as pricing has become more sensitive, but the bigger issue
for these companies is that they are now entering a heavy spending cycle.
AT&T, for example, will be bidding on new personal communications service
(PCS) licenses; Sprint recently has made forays into cable television; and
MCI also appears ready to make investments to improve its competitive
position. The possible dilutive effect of this upcoming spending activity
has depressed the long distance stocks, and generally I have kept the fund
out of them.
Q. HOW HAVE THE "BABY BELLS" BEEN DOING?
A. The regional operating companies have performed pretty well as a group,
especially since interest rates have begun to stabilize. Some of the Baby
Bells did better than others. Ameritech and Southwestern Bell, for
instance, both turned in strong results during the period and made
substantial contributions to overall fund performance. Local phone
companies tend to move in step with local economic conditions, so if the
interest rate environment continues to improve, I would expect other of the
regional operators to start showing improvements as well. Overall, I
believe the Baby Bells are in a good competitive position and should remain
a major area of focus for the fund.
Q. WHAT'S YOUR TAKE ON THE INTERNATIONAL MARKETS?
A. I think there may be some exciting overseas opportunities over the next
few years, both in equipment sales and phone service. Asia comes to mind as
an area with great growth potential, and several of the fund's holdings are
well positioned to capitalize on that potential, particularly in terms of
supplying equipment. However, I've generally tried to keep the fund out of
the foreign telecommunications stocks, and I'm pleased, for instance, that
the fund has not played heavily in the Latin American markets, which have
been severely depressed.
Q. WHAT WERE YOUR BIGGEST DISAPPOINTMENTS DURING THE PERIOD?
A. Even my very limited exposures to local Latin American phone companies
hurt the fund. Two in particular -Telefonos de Mexico and Telefonica
Argentina - have to be called major disappointments. To a lesser extent,
I'd have to say that I was somewhat disappointed that the domestic long
distance carriers - particularly AT&T - were hit so hard by competitive
pricing pressures and the discounting effect of their upcoming spend
cycles.
Q. WHAT'S YOUR VIEW LOOKING FORWARD? ANY BIG CHANGES ON THE HORIZON?
A. Of course, telecommunications stocks can be volatile over any short
period. However, when you think about where the industry may be 10 or so
years down the road, the prospects are very exciting. The industry is
reshaping itself, and I believe there will be many opportunities to benefit
from this in the future. At present, I have the fund positioned pretty much
as I want it to be. My current emphasis is on the wireless businesses,
which should continue to grow briskly and benefit from the long distance
companies' future spending plans, and on the regional operating companies,
which also should continue to support fund growth. If carefully selected, I
believe there could be some real bargains available in the international
markets, and I may begin focusing some future attention there.
FUND FACTS
START DATE: July 29, 1985
SIZE: As of February 28, 1995, more than
$369 million
MANAGER: David Felman, since April 1994;
manager, Fidelity Select Chemicals Portfolio,
since January 1995; analyst, specialty
chemicals, construction and engineering
industries; joined Fidelity in 1992
(checkmark)
TELECOMMUNICATIONS PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 80.7%
SHARES VALUE (NOTE 1)
ADVERTISING - 0.4%
ADVERTISING AGENCIES - 0.4%
ADVO-Systems, Inc. 79,500 $ 1,500,580 00758510
BROADCASTING - 5.0%
CABLE TV OPERATORS - 4.3%
Gaylord Entertainment Co. Class A 57,400 1,506,750 36790110
International Family Entertainment
Class B (a) 1,500 19,500 45950M10
Tele-Communications, Inc. Class A (a) 9,750 221,813 87924V10
Time Warner, Inc. 200 7,725 88731510
Viacom, Inc. (a):
Class A 88,628 4,099,045 92552410
Class B (non-vtg.) 217,285 9,723,504 92552430
(rights) 36,600 36,600 92552414
15,614,937
TELEVISION BROADCASTING - 0.7%
Grupo Televisa GDS (b) 5,000 82,500 40049J20
Heritage Media Corp. Class A (a) 19,700 504,813 42724120
Multimedia, Inc. (a) 50,000 1,900,000 62545K10
2,487,313
TOTAL BROADCASTING 18,102,250
CELLULAR - 7.2%
CELLULAR & COMMUNICATION SERVICES - 7.2%
Airtouch Communications (a) 125,900 3,430,775 00949T10
BCE Mobile Communications, Inc. (a) 30,000 1,006,621 05534G10
Call-Net Enterprises Class B (a)(b) 20,000 98,953 13091030
Cellular Communications, Inc. (a)
Class P 51,100 2,661,799 15091793
Series A (redeemable) 13,000 659,750 15091710
Century Telephone Enterprises,Inc. 200,887 6,252,608 15668610
Onecomm Corp. (a) 15,000 176,250 68243510
Rogers Cantel Mobile Communications, Inc.
Class B (non-vtg.) (a) 120,600 3,113,616 77510210
Rogers Communications, Inc. Class B (a) 520,000 6,502,106 77510920
Vanguard Cellular Systems, Inc.
Class A (a) 9,300 241,800 92202210
Vodafone Group PLC sponsored ADR 73,600 2,244,800 92857T10
26,389,078
COMMUNICATIONS EQUIPMENT - 11.9%
TELEPHONE EQUIPMENT - 11.9%
ADC Telecommunications, Inc. (a) 3,300 183,975 00088610
Boston Technology, Inc. (a) 18,800 294,925 10114330
DSC Communications Corp. (a) 121,200 4,363,200 23331110
Ericsson (L.M.) Telephone Co.:
Class B 20,000 1,104,905 29482120
Class B ADR 251,500 14,304,063 29482140
Inter-Tel, Inc. (a) 6,500 73,938 45837210
InterVoice, Inc. (a) 10,000 151,250 46114210
Newbridge Networks Corp. (a) 18,400 623,300 65090110
Nokia Corp. AB sponsored ADR (a) 48,400 3,642,100 65490220
Nokia Corp. AB 88,700 13,279,768 65599910
Nokia Corp. Free shares 37,900 5,211,875 65599992
43,233,299
COMPUTER SERVICES & SOFTWARE - 1.1%
CAD/CAM/CAE - 0.3%
ECI Telecom Ltd. 10,000 152,500 26825810
EIS International, Inc. (a) 55,500 860,250 26853910
1,012,750
SHARES VALUE (NOTE 1)
DATA PROCESSING - 0.8%
Automatic Data Processing, Inc. 10,000 $ 615,000 05301510
Ceridian Corp. (a) 70,000 2,205,000 15677T10
2,820,000
TOTAL COMPUTER SERVICES & SOFTWARE 3,832,750
COMPUTERS & OFFICE EQUIPMENT - 0.7%
COMPUTER PERIPHERALS - 0.7%
Norand Corp. (a) 65,000 2,551,250 65542110
ELECTRICAL EQUIPMENT - 1.7%
ELECTRICAL EQUIPMENT - WHOLESALE - 0.1%
Antec Corp. (a) 5,900 128,325 03664P10
ELECTRICAL MACHINERY - 1.6%
Philips Electronics NV 180,000 5,917,500 71833750
TOTAL ELECTRICAL EQUIPMENT 6,045,825
ELECTRONIC INSTRUMENTS - 0.1%
ELECTRONIC EQUIPMENT - 0.1%
Teradyne, Inc. (a) 7,700 280,088 88077010
ELECTRONICS - 2.4%
ELECTRONIC PARTS - WHOLESALE - 0.3%
Marshall Industries (a) 40,600 1,055,600 57239310
SEMICONDUCTORS - 2.1%
Intel Corp. 30,300 2,416,425 45814010
Motorola, Inc. 93,000 5,347,500 62007610
Texas Instruments, Inc. 100 7,875 88250810
7,771,800
TOTAL ELECTRONICS 8,827,400
ENGINEERING - 1.1%
WATER & SEWER PIPES - 1.1%
Glenayre Technologies, Inc. (a) 103,950 4,183,988 37789910
MEDICAL FACILITIES MANAGEMENT - 0.0%
HEALTH SERVICES - 0.0%
Lambert Communications, Inc. (a) 190,000 45,600 51328G10
PRINTING - 0.9%
MANIFOLD BUSINESS FORMS - 0.9%
Reynolds & Reynolds Co. Class A 118,900 3,284,613 76169510
SERVICES - 0.1%
PUBLIC RELATIONS SERVICES - 0.1%
True North Communications 25,000 396,875 89784410
TELEPHONE SERVICES - 48.1%
ALC Communications Corp. (a) 465,100 13,720,450 00157530
AT&T Corp. 82,800 4,284,900 00195710
ALLTEL Corp. 1,300 37,213 02003910
Ameritech Corp. 553,500 23,731,313 03095410
Bell Atlantic Corp. 273,700 14,677,163 07785310
BellSouth Corp. 226,800 13,381,200 07986010
British Telecommunications PLC ADR 5,000 298,750 11102140
Cincinnati Bell, Inc. 30,000 630,000 17187010
Comsat Corp., Series 1 41,750 741,063 20564D10
DDI Corp. Ord. 897 6,647,191 23399J22
Frontier Corp. 436,600 9,987,225 35906P10
GTE Corp. 167,773 5,599,424 36232010
Koninklijke PPT Nederland 305,000 10,753,324 72699422
Koninklijke PPT Nederland (a)(b) 44,200 1,558,351 72699423
Koninklijke PTT Nederland sponsored
ADR (b) 20,000 702,500 78064110
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TELEPHONE SERVICES - CONTINUED
LCI International, Inc. (a) 143,900 $ 3,165,800 50181310
LDDS Communications, Inc. (a) 139,712 3,274,500 50182L10
MFS Communications, Inc. (a) 60,000 2,085,000 55272T10
Nippon Telegraph & Telephone
Corp. Ord. 142 1,012,661 65462492
NYNEX Corp. 258,700 10,153,975 67076810
Pacific Telesis Group 22,600 678,000 69489010
Southern New England
Telecommunications Corp. 58,800 1,947,750 84348510
SBC Communications, Inc. 545,600 22,710,600 84533310
Sprint Corp. 45,600 1,333,800 85206110
Tele Denmark Class B AS (a) 30,000 1,526,810 87924292
Telecom Argentina Stet France
Telecom SA 53,500 184,566 90899992
Telebras PN (Pfd. Reg.) 9,921,131 292,773 95499792
Telefonica de Argentina SA Class B 191,000 349,513 87999D92
Telefonica de Espana SA sponsored ADR 20,000 750,000 87938220
Telefonos de Mexico SA sponsored ADR
representing shares Ord. Class L 130,000 3,591,250 87940378
Telephone & Data Systems, Inc. 179,855 8,205,884 87943310
Telus Corp. 10,000 119,643 87970R10
Telecom Italia Ord. 350,000 846,559 87999R22
US Long Distance Corp (a) 1,300 18,850 91191220
U.S. West, Inc. 156,700 6,072,125 91288910
175,070,126
TOTAL COMMON STOCKS
(Cost $284,631,441) 293,743,722
PREFERRED STOCKS - 1.7%
CONVERTIBLE PREFERRED STOCKS - 0.6%
TELEPHONE SERVICES - 0.6%
LCI International 10,000 300,000 50181320
Philippine Long Distance
Telephone (GDR) 34,000 1,853,000 71825270
TOTAL CONVERTIBLE PREFERRED STOCKS 2,153,000
NONCONVERTIBLE PREFERRED STOCKS - 1.1%
TELEPHONE SERVICES - 1.1%
Stet (Societa Finanziaria Telefonica) Spa 945,200 2,166,947 85982592
Telecom Italia Ord. 1,000,000 1,941,720 87999R24
TOTAL NONCONVERTIBLE PREFERRED STOCKS 4,108,667
TOTAL PREFERRED STOCKS
(Cost $6,586,975) 6,261,667
CONVERTIBLE BONDS - 0.2%
PRINCIPAL
AMOUNT
COMMUNICATIONS EQUIPMENT - 0.2%
TELEPHONE EQUIPMENT - 0.2%
Ericsson (L.M.) Telephone Co.
4 1/4%, 6/30/00
(Cost $480,442) $ 345,700 636,088 294821AA
REPURCHASE AGREEMENTS - 17.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a
joint trading account, at 6.08%
dated 2/28/95 due 3/1/95 $63,438,712 $ 63,428,000 99799QTW
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $355,126,858) $ 364,069,477
LEGEND
1. Non-income producing
2. Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $2,442,304 or 0.7% of net
assets.
OTHER INFORMATION
Purchases and sales of securities, other than short-term securities,
aggregated $352,762,383 and $411,539,600, respectively (see Note 4 of Notes
to Financial Statements).
The fund placed a portion of its portfolio transactions with brokerage
firms which are affiliates of Fidelity Management & Research Company. The
commissions paid to these affiliated firms were $164,640 for the period
(see Note 5 of Notes to Financial Statements).
At the period end, the value of securities loaned and the value of
collateral amounted to $3,014,000 and $3,151,000, respectively (see Note 7
of Notes to Financial Statements).
The maximum loan and average daily loan balances during the periods for
which loans were outstanding amounted to $6,463,000 and $5,133,250,
respectively. The weighted average interest rate paid was 4.1% (see Note 8
of Notes to Financial Statements).
Distribution of investments by country, as a percentage of total value of
investment in securities, is as follows:
United States 74.6%
Finland 6.1
Netherland 5.2
Sweden 4.4
Canada 3.1
Japan 2.1
Italy 1.4
Mexico 1.0
Others (individually less than 1%) 2.1
TOTAL 100.0%
INCOME TAX INFORMATION
At February 28, 1995, the aggregate cost of investment securities for
income tax purposes was $356,148,060. Net unrealized appreciation
aggregated $7,921,417, of which $23,370,713 related to appreciated
investment securities and $15,449,296 related to depreciated investment
securities.
The fund hereby designates $748,000 as a capital gain dividend for the
purpose of the dividend paid deduction.
TELECOMMUNICATIONS PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $63,428,000) (cost $355,126,858) - $ 364,069,477
See accompanying schedule
Cash 977
Receivable for investments sold 16,510,796
Receivable for fund shares sold 1,311,586
Dividends receivable 204,489
Interest receivable 612
Redemption fees receivable 603
Other receivables 57,054
TOTAL ASSETS 382,155,594
LIABILITIES
Payable for investments purchased $ 6,639,369
Payable for fund shares redeemed 2,363,919
Accrued management fee 192,544
Other payables and 332,360
accrued expenses
Collateral on securities loaned, 3,151,000
at value
TOTAL LIABILITIES 12,679,192
NET ASSETS $ 369,476,402
Net Assets consist of:
Paid in capital $ 353,058,870
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions 7,474,913
Net unrealized appreciation (depreciation) on investments 8,942,619
NET ASSETS, for 9,636,303 shares outstanding $ 369,476,402
NET ASSET VALUE and redemption price per share ($369,476,402 (divided by) 9,636,303 shares) $38.34
Maximum offering price per share (100/97.00 of $38.34) $39.53
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INVESTMENT INCOME $ 6,730,453
Dividends
Interest (including security lending fees of $83,828) 1,951,912
TOTAL INCOME 8,682,365
EXPENSES
Management fee $ 2,320,344
Transfer agent 3,078,197
Fees
Redemption fees (173,417
)
Accounting and security lending fees 380,164
Non-interested trustees' compensation 4,163
Custodian fees and expenses 63,987
Registration fees 100,369
Audit 46,870
Legal 6,462
Interest 2,332
Reports to shareholders 20,787
Miscellaneous 3,430
Total expenses before reductions 5,853,688
Expense reductions (46,248 5,807,440
)
NET INVESTMENT INCOME 2,874,925
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investment securities 13,111,872
Foreign currency transactions (3,416 13,108,456
)
Change in net unrealized appreciation (depreciation) on investment securities 10,501,018
NET GAIN (LOSS) 23,609,474
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 26,484,399
OTHER INFORMATION $1,442,750
Sales Charges Paid to FDC
Deferred sales charges withheld $19,309
by FDC
Exchange fees withheld by FSC $126,753
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 2,874,925 $ 2,274,500
Net investment income
Net realized gain (loss) 13,108,456 68,364,890
Change in net unrealized appreciation (depreciation) 10,501,018 (16,004,271
)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 26,484,399 54,635,119
Distributions to shareholders: (3,125,414 (1,564,699
From net investment income ) )
From net realized gain (12,275,476 (37,644,735
) )
TOTAL DISTRIBUTIONS (15,400,890 (39,209,434
) )
Share transactions 199,692,240 778,655,072
Net proceeds from sales of shares
Reinvestment of distributions 15,044,524 38,499,190
Cost of shares redeemed (227,502,551 (596,254,864
) )
Paid in capital portion of redemption fees 133,502 361,815
Net increase (decrease) in net assets resulting from share transactions (12,632,285 221,261,213
)
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,548,776 236,686,898
)
NET ASSETS
Beginning of period 371,025,178 134,338,280
End of period (including undistributed net investment income of $0 $ 369,476,402 $ 371,025,178
and $1,033,664, respectively)
OTHER INFORMATION
Shares
Sold 5,395,122 19,999,193
Issued in reinvestment of distributions 417,307 1,056,452
Redeemed (6,175,717 (14,984,685
) )
Net increase (decrease) (363,288) 6,070,960
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA D 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 37.10 $ 34.19 $ 29.22 $ 24.98 $ 23.19
Income from Investment Operations
Net investment income .29 .25 .29 .36 .31
Net realized and unrealized gain (loss) 2.54 7.00 5.29 4.13 1.86
Total from investment operations 2.83 7.25 5.58 4.49 2.17
Less Distributions (.33) E (.20) (.18) (.28) (.43)
From net investment income
From net realized gain (1.27) E (4.18) (.48) - -
Total distributions (1.60) (4.38) (.66) (.28) (.43)
Redemption fees added to paid in capital .01 .04 .05 .03 .05
Net asset value, end of period $ 38.34 $ 37.10 $ 34.19 $ 29.22 $ 24.98
TOTAL RETURN B, C 7.98% 21.90% 19.49% 18.19% 9.83%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 369,476 $ 371,025 $ 134,338 $ 78,533 $ 55,162
Ratio of expenses to average net assets 1.55% 1.53% 1.74% A 1.90% 1.97%
Ratio of expenses to average net assets before expense reductions 1.56% 1.54% 1.74% A 1.90% 1.97%
Ratio of net investment income to average net assets .77% .64% 1.16% A 1.32% 1.35%
Portfolio turnover rate 107% 241% 115% A 20% 262%
</TABLE>
A ANNUALIZED
B THE TOTAL RETURNS WOULD HAVE BEEN LOWER HAD CERTAIN EXPENSES NOT BEEN
REDUCED DURING THE PERIODS SHOWN (SEE NOTE 9 OF NOTES TO FINANCIAL
STATEMENTS).
C TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
D NET INVESTMENT INCOME PER SHARE HAS BEEN CALCULATED BASED ON AVERAGE
SHARES OUTSTANDING DURING THE PERIOD.
E THE AMOUNTS SHOWN REFLECT CERTAIN RECLASSIFICATIONS RELATED TO BOOK TO
TAX DIFFERENCES (SEE NOTE 1 OF NOTES TO FINANCIAL STATEMENTS).
MONEY MARKET PORTFOLIO
PERFORMANCE
PERFORMANCE
To measure a money market fund's performance, you can look at either total
return or yield. Total return reflects both the change in a fund's share
price over a given period, and reinvestment of its dividends (or income).
Yield measures the income paid by a fund. Since a money market fund tries
to maintain a $1 share price, yield is an important measure of performance.
CUMULATIVE TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
MONEY MARKET 4.28% 25.45% 71.57%
MONEY MARKET
(INCL. 3% SALES CHARGE) 1.16% 21.69% 66.43%
Average All Taxable
Money Market Fund 4.18% 25.06% 70.53%
Consumer Price Index 2.86% 17.89% 39.72%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, one year, five years, or since the fund
started on August 30, 1985. For example, if you invested $1,000 in a fund
that had a 5% return over the past year, the value of your investment would
be $1,050. To measure how the fund's performance stacked up against its
peers, you can compare it to the average all taxable money market fund,
which reflects the performance of 713 all taxable money market funds with
similar objectives tracked by IBC/Donoghue's MONEY FUND REPORT(registered
trademark) during the period covered by this report. Comparing the fund's
performance to the consumer price index (CPI) helps show how your
investment did compared to inflation. (The CPI and IBC/Donoghue returns are
the closest available match to those covered by the fund.)
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED PAST 1 PAST 5 LIFE OF
FEBRUARY 28, 1995 YEAR YEARS FUND
MONEY MARKET 4.28% 4.64% 5.84%
MONEY MARKET
(INCL. 3% SALES CHARGE) 1.16% 4.00% 5.50%
Average All Taxable
Money Market Fund 4.18% 4.57% 5.78%
Consumer Price Index 2.86% 3.35% 3.58%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had achieved that return
by performing at a constant rate each year.
YIELD
Row: 1, Col: 1, Value: 2.48
Row: 1, Col: 2, Value: 2.79
Row: 1, Col: 3, Value: 2.32
Row: 2, Col: 1, Value: 3.64
Row: 2, Col: 2, Value: 3.51
Row: 2, Col: 3, Value: 2.38
Row: 3, Col: 1, Value: 4.26
Row: 3, Col: 2, Value: 4.08
Row: 3, Col: 3, Value: 2.45
Row: 4, Col: 1, Value: 4.470000000000001
Row: 4, Col: 2, Value: 4.84
Row: 4, Col: 3, Value: 2.68
Row: 5, Col: 1, Value: 5.85
Row: 5, Col: 2, Value: 5.49
Row: 5, Col: 3, Value: 2.88
6% -
4% -
2% -
0%
Money Market
Average All
Taxable Money
Market Fund
MMDA
3/1/94 5/31/94 8/30/94 11/29/94 2/28/95
Money Market 2.48% 3.64% 4.26% 4.47% 5.85%
Average All
Taxable Money
Market Fund 2.79% 3.51% 4.08% 4.84% 5.49%
2/23/94 6/1/94 8/25/94 11/30/94 3/1/95
MMDA 2.32% 2.38% 2.45% 2.68% 2.88%
YIELD refers to the income paid by the fund over a given period. Yields for
money market funds are usually for seven-day periods, expressed as annual
percentage rates. A yield that assumes income earned is reinvested or
compounded is called an effective yield. The chart above shows the fund's
current seven-day yield at quarterly intervals over the past year. You can
compare these yields to the average all taxable money market fund and the
average bank money market deposit account (MMDA). Figures for the average
all taxable money market fund are from the IBC/Donoghue's MONEY FUND
REPORT.(registered trademark) The MMDA average is supplied by BANK RATE
MONITOR.(Trademark)
COMPARING PERFORMANCE
There are some important differences between
a bank money market deposit account (MMDA)
and a money market fund. First, the U.S.
government neither insures nor guarantees a
money market fund. In fact, there is no
assurance that a money fund will maintain a $1
share price. Second, a money market fund
returns to its shareholders income earned by the
fund's investments after expenses. This is in
contrast to banks, which set their MMDA rates
periodically based on current interest rates,
competitors' rates, and internal criteria.
(checkmark)
John Todd,
Portfolio Manager of Fidelity Select Money
Market Portfolio
Q. JOHN, WE'VE BEEN IN A RISING-RATE ENVIRONMENT NOW FOR MORE THAN A YEAR.
CAN YOU BRING US UP TO DATE ON DEVELOPMENTS DURING THE PAST YEAR?
A. Sure. The current cycle of rate increases began in February 1994, when
the Federal Reserve Board raised the federal funds rate - what banks charge
each other for overnight loans - from 3.00% to 3.25%. It was the first
increase in five years and it signaled an important shift in monetary
policy: the Fed's new aim was to slow the pace of economic growth and
prevent a fresh outbreak of inflation. By the end of August, after five
separate rate increases totaling one and three-quarters percentage points,
the federal funds rate was 4.75%. It's worth noting that with the rate
increase in August, the Fed hinted it had arrived at what it felt was a
neutral monetary policy. Nevertheless, economic growth continued at what
the Fed presumed was an inflationary pace, resulting in two more rate
increases: three-quarters of a percentage point in November, and one-half
percentage point in February 1995. In fact, until the final weeks of
December, most market participants were anticipating several more rate
increases in the first half of 1995. Then, suddenly, the mood shifted. The
consensus now seems to be that rates may have peaked, or that only one more
round of rate increases is in store.
Q. WHY DID THE OUTLOOK SHIFT AT THE END OF THE PERIOD?
A. It's hard to say, and I hasten to add that I don't share the market's
optimism. During the fourth quarter of 1994, the economy grew at an
annualized rate of 4.6%. That was the fastest growth rate we'd seen all
year, well above the Fed's target rate of 2.5%. Then in late January and
continuing through February we began to see signs - mainly in the
employment and consumer spending numbers - that perhaps the growth rate was
finally slowing down. The market reacted positively, and we saw a dramatic
narrowing of the spread between short-term rates and long-term rates. But
whether that indicates a fundamental shift in the interest rate
environment, or simply a breather before rates head back up again, I think
remains to be seen.
Q. WHAT WAS YOUR STRATEGY DURING THE PAST SIX MONTHS?
A. From last August through the fall months, I generally kept the fund's
average maturity in the neutral range - between 40 and 50 days. Toward the
end of the year, I extended the fund slightly, to as many as 52 days in
November. I did so not because I believed rates had peaked, but because I
felt the market had already factored the possibility of future rate
increases into current yields. Then as 1995 began, I shortened the fund
dramatically - to less than 28 days by the end of January - to prepare for
what I assumed would be another rate increase in February. Since then, I've
stayed shorter than my competitors on the theory that the market may be
overreacting to recent signs of an economic slowdown. The fund's average
maturity was 31 days at the end of February.
Q. HOW DID THE FUND PERFORM?
A. The fund's seven-day yield on February 28, 1995, was 5.85%, compared to
2.45% a year ago. The fund's total return during the past year was 4.28%.
That beat the average total return of 4.18% for all taxable money market
funds during the same period, according to IBC/Donoghue.
Q. WHAT CAN WE EXPECT IN THE MONTHS AHEAD?
A. The consensus in the market seems to be that the economy is indeed
slowing down, and that interest rates have peaked. Again, I don't share
that view. I still see ample evidence in the economy of what I would call a
self-sustaining growth dynamic. That's not to say there won't be pauses
along the way; that may be what's happening now. Moreover, I think you have
to look at the economic crisis in Mexico, and consider the possible
negative impact of that on U.S. exports and, by extension, the U.S.
economy. So it may well be that the current pause in the growth rate will
last longer than I originally anticipated. Still, I think it's only a
matter of time before growth resumes at a pace that will cause the Fed to
once again consider raising interest rates. That's enough for me to want to
keep the fund's average maturity within the neutral to defensive range -
from 30 to 40 days - for the foreseeable future.
FUND FACTS
START DATE: August 30, 1985
SIZE: as of February 28, 1995, more than
$573 million
MANAGER: John Todd, since January 1991;
manager, Spartan Money Market Fund, since
1989; Daily Money Fund: Money Market and
Fidelity Institutional Cash Portfolios: Money
Market, since 1992; joined Fidelity in 1981
(checkmark)
MONEY MARKET PORTFOLIO
INVESTMENTS FEBRUARY 28, 1995
Showing Percentage of Total Value of Investment in Securities
BANKERS' ACCEPTANCES - 4.6%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
DOMESTIC BANKERS' ACCEPTANCES - 3.6%
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOC.
3/30/95 5.98% $ 23,000,000 $ 22,889,760 06399ACF
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 1.0%
FUJI BANK, LTD.
3/28/95 6.15 6,000,000 5,972,595 35999CKD
28,862,355
CERTIFICATES OF DEPOSIT - 25.6%
DOMESTIC CERTIFICATES OF DEPOSIT - 3.2%
CHEMICAL BANK
3/31/95 6.03 20,000,000 20,000,000 163994QN
NEW YORK BRANCH, YANKEE DOLLAR, FOREIGN BANKS - 16.9%
BANK OF NOVA SCOTIA
6/6/95 6.30 1,000,000 1,000,629 669991EB
BANK OF TOKYO
3/24/95 6.04 2,000,000 2,000,286 0659935W
BANQUE NATIONALE DE PARIS
4/6/95 5.72 10,000,000 10,000,371 055992NT
BAYERISCHE LANDESBANK GIROZENTRALE
3/9/95 6.00 20,000,000 20,000,000 072990EJ
CAISSE NATIONALE DE CREDIT AGRICOLE
4/28/95 5.91 5,000,000 4,999,478 1280059T
COMMERZBANK, GERMANY
4/13/95 5.73 1,000,000 999,506 202990NY
4/14/95 5.73 10,000,000 10,000,000 202990NX
FUJI BANK, LTD.
3/1/95 6.06 5,000,000 5,000,000 35999CJJ
4/10/95 6.13 5,000,000 5,000,000 35999CKG
SANWA BANK, LTD.
3/24/95 6.08 3,000,000 3,000,424 804999TP
SOCIETE GENERALE
3/17/95 5.93 20,000,000 20,000,000 833991VC
SWISS BANK CORP.
3/6/95 6.32 10,000,000 10,000,000 870990YN
3/27/95 5.63 15,000,000 15,000,000 870990YK
107,000,694
LONDON BRANCH, EURODOLLAR, FOREIGN BANKS - 5.5%
COMMERZBANK, GERMANY
4/13/95 6.07 10,000,000 10,000,070 202990PL
NATIONAL WESTMINSTER BANK, PLC
5/9/95 6.01 25,000,000 25,000,138 638990JH
35,000,208
162,000,902
COMMERCIAL PAPER - 36.5%
ABN-AMRO NORTH AMERICA FINANCE, INC.
4/14/95 5.71 5,000,000 4,966,083 03299BAR
AMERICAN EXPRESS CREDIT CORP.
3/20/95 6.10 7,000,000 6,977,649 025990JA
AMERICAN HOME PRODUCTS
3/6/95 6.01 3,275,000 3,272,271 026993CG
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
BEAR STEARNS COS., INC.
3/1/95 6.15% $ 10,000,000 $ 10,000,000 07399C4L
4/13/95 6.16 3,000,000 2,978,142 07399C2K
CHRYSLER FINANCIAL CORPORATION
4/11/95 6.22 5,000,000 4,964,979 175992BU
4/17/95 6.25 5,000,000 4,959,658 175992BX
4/18/95 6.27 5,000,000 4,958,667 175992CB
4/24/95 6.20 5,000,000 4,954,025 175992CG
COOPER INDUSTRIES, INC.
3/7/95 6.07 10,000,000 9,989,900 217990PT
DAYTON HUDSON CORP.
3/29/95 6.05 7,000,000 6,967,224 239992KJ
EIGER CAPITAL CORP.
3/21/95 6.03 8,000,000 7,973,333 278997BQ
FORD MOTOR CREDIT CORP.
4/5/95 6.16 11,000,000 10,934,764 34599BYB
5/23/95 6.14 10,000,000 9,860,514 34599B2A
GENERAL ELECTRIC CAPITAL CORP.
3/1/95 6.09 (a) 5,000,000 5,000,000 369998SA
4/24/95 5.87 10,000,000 9,914,500 369998RF
6/8/95 6.27 1,000,000 983,087 369998TS
6/12/95 6.27 1,000,000 982,404 369998TT
GENERAL MOTORS ACCEPTANCE CORP.
5/8/95 6.36 8,000,000 7,905,253 638998XR
5/15/95 6.37 5,000,000 4,934,687 638998XN
GENERALE BANK
3/27/95 5.66 15,000,000 14,940,417 371995CR
ITT FINANCIAL
3/9/95 6.13 5,000,000 4,993,222 450990NU
3/10/95 6.13 5,000,000 4,992,375 450990NT
3/20/95 6.16 5,000,000 4,983,850 450990NY
KREDIETBANK, N.A. FINANCE CORP.
4/28/95 5.89 5,000,000 4,953,922 50099DAP
MERRILL LYNCH & CO., INC.
5/15/95 6.19 5,000,000 4,937,500 59099GDV
MORGAN STANLEY GROUP, INC.
3/13/95 6.38 10,000,000 9,979,067 61799ELN
NEW CENTER ASSET TRUST
4/17/95 6.17 5,000,000 4,960,181 643995EF
PEPSICO
3/1/95 6.03 10,000,000 10,000,000 713991GG
SIEMENS CORP.
4/25/95 5.86 10,000,000 9,912,917 8269909T
TEXTRON, INC.
3/13/95 6.17 2,000,000 1,995,907 88599CEQ
3/20/95 6.16 2,000,000 1,993,529 88599CER
TORONTO DOMINION HOLDINGS USA, INC.
3/1/95 5.20 10,000,000 10,000,000 89199AAK
3/1/95 5.21 5,000,000 5,000,000 89199AAJ
8/15/95 6.40 10,000,000 9,712,389 89199AAP
U.S. WEST COMMUNICATIONS
4/3/95 6.09 3,900,000 3,878,371 91299DAC
230,710,787
FEDERAL AGENCIES - 3.9%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
FEDERAL FARM CREDIT BANK - AGENCY COUPONS - 0.8% (A)
3/1/95 6.17% $ 5,000,000 $ 4,995,823 31331NMK
FEDERAL HOME LOAN MORTGAGE CORP. - DISCOUNT NOTES - 2.3%
5/22/95 6.05 14,600,000 14,401,797 3559935D
FEDERAL NATIONAL MORTGAGE ASSOC. - DISCOUNT NOTES - 0.8%
8/14/95 6.40 5,370,000 5,216,478 9950248W
24,614,098
BANK NOTES - 9.0%
COMERICA BANK-DETROIT (A)
3/1/95 6.69 10,000,000 10,000,000 226990AX
HUNTINGTON NATIONAL BANK (A)
3/1/95 6.15 12,000,000 11,995,792 4464389T
NBD BANK, N.A.
4/7/95 5.80 10,000,000 10,000,000 634990BC
PNC BANK, N.A. (A)
3/1/95 6.17 10,000,000 9,993,653 69399EAN
3/7/95 6.13 15,000,000 14,992,751 69399EAK
56,982,196
MASTER NOTES (A) - 1.1%
J.P. MORGAN SECURITIES
3/1/95 6.33 7,000,000 7,000,000 61699B2A
MEDIUM-TERM NOTES (A) - 8.5%
ABBEY NATIONAL TREASURY SERVICE (B)
3/1/95 6.73 15,000,000 14,999,548 007994GT
3/31/95 6.50 15,000,000 15,000,000 010998AJ
BENEFICIAL CORP.
3/1/95 6.53 3,000,000 3,000,000 08199BAX
GENERAL MOTORS ACCEPTANCE CORP.
5/7/95 6.35 5,000,000 5,000,000 638998SX
GOLDMAN SACHS GROUP, L.P. (THE) (B)
3/1/95 6.03 4,000,000 4,000,000 696992MK
5/16/95 6.30 4,000,000 4,000,000 696992ML
NORWEST CORP.
3/15/95 6.37 8,000,000 8,000,000 66899CBK
53,999,548
SHORT-TERM NOTES (A) (C) - 2.2%
SMM TRUST COMPANY (1994-E)
4/13/95 6.33 12,000,000 12,000,000 83199GAF
4/13/95 6.42 2,000,000 1,999,806 83199GAF
13,999,806
TIME DEPOSITS - 3.9%
DAI-ICHI KANGYO BANK, LTD.
3/6/95 6.00 15,000,000 15,000,000 233991DD
SAKURA BANK, LTD.
3/8/95 6.06 10,000,000 10,000,000 793999QD
25,000,000
MUNICIPAL SECURITIES - 0.7%
ANNUALIZED YIELD
DUE AT TIME OF PRINCIPAL VALUE
DATE PURCHASE AMOUNT (NOTE 1)
LOS ANGELES COUNTY TRANSPORTATION COMMISSION
3/1/95 6.28% $ 4,600,000 $ 4,600,000 545994BT
REPURCHASE AGREEMENTS - 4.0%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Government Obligations),
in a joint trading account, at 6.14%,
dated 2/28/95 due 3/1/95 $ 25,440,339 25,436,000 99799QTU
TOTAL INVESTMENTS - 100% $ 633,205,692
TOTAL COST FOR INCOME TAX PURPOSES - $633,205,692
LEGEND
(a) The due dates on these types of securities reflect the next interest
rate reset date or, when applicable, the final maturity date.
(b) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $37,999,548 or 6.6% of net
assets.
(c) Restricted securities - Investment in securities not registered under
the Securities Act of 1933 (see Note 2 of Notes to Financial Statements).
Additional information on each holding is as follows:
ACQUISITION ACQUISITION
SECURITY DATE COST
SMM Trust Company:
(1994-E) 4/13/94 $12,000,000
(1994-E) 5/23/94 $1,998,534
INCOME TAX INFORMATION
At February 28, 1995, the fund had a capital loss carryforward of
approximately $30,600 of which $3,200, $21,400, and $6,000 will expire on
February 28, 1998, 2000, and 2002, respectively.
MONEY MARKET PORTFOLIO
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
FEBRUARY 28, 1995
ASSETS
Investment in securities, at value (including repurchase agreements of $25,436,000) - See accompanying $ 633,205,692
schedule
Receivable for fund shares sold 64,892,605
Interest receivable 3,393,309
TOTAL ASSETS 701,491,606
LIABILITIES
Payable for investments purchased $ 32,889,760
Payable for fund shares redeemed 94,915,260
Dividends payable 87,834
Accrued management fee 111,850
Other payables and accrued expenses 342,922
TOTAL LIABILITIES 128,347,626
NET ASSETS $ 573,143,980
Net Assets consist of:
Paid in capital $ 573,174,518
Accumulated net realized gain (loss) on investments (30,538
)
NET ASSETS, for 573,169,260 shares outstanding $ 573,143,980
NET ASSET VALUE, offering price and redemption price per share ($573,143,980 (divided by) 573,169,260 shares) $1.00
Maximum offering price per share (100/97 of $1.00) $1.03
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED FEBRUARY 28, 1995
INTEREST INCOME $ 32,932,977
EXPENSES
Management fee $ 1,380,366
Transfer agent fees 2,350,014
Accounting fees and expenses 100,919
Non-interested trustees' compensation 8,844
Custodian fees and expenses 36,670
Registration fees 479,209
Audit 57,704
Legal 10,014
Reports to shareholders 13,087
Miscellaneous 6,197
TOTAL EXPENSES 4,443,024
NET INTEREST INCOME 28,489,953
NET REALIZED GAIN (LOSS) 34,131
ON INVESTMENTS
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 28,524,084
</TABLE>
OTHER INFORMATION
Sales charges paid to FDC $3,280,023
Deferred sales charges withheld $156,149
by FDC
STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) IN NET ASSETS YEAR ENDED YEAR ENDED
FEBRUARY 28, FEBRUARY 28,
1995 1994
<TABLE>
<CAPTION>
<S> <C> <C>
Operations $ 28,489,953 $ 11,974,045
Net interest income
Net realized gain (loss) 34,131 (5,966)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 28,524,084 11,968,079
Dividends to shareholders from net interest income (28,489,953) (11,974,045)
Share transactions at net asset value of $1.00 per share 4,782,122,991 4,535,732,020
Proceeds from sales of shares
Reinvestment of dividends from net interest income 26,192,515 10,826,362
Cost of shares redeemed (4,753,862,525) (4,459,028,175)
Net increase (decrease) in net assets and shares resulting from share transactions 54,452,981 87,530,207
TOTAL INCREASE (DECREASE) IN NET ASSETS 54,487,112 87,524,241
NET ASSETS
Beginning of period 518,656,868 431,132,627
End of period $ 573,143,980 $ 518,656,868
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEE ACCOMPANYING NOTES WHICH ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
YEARS ENDED TEN MONTHS YEARS ENDED
FEBRUARY 28, ENDED APRIL 30,
FEBRUARY 28,
SELECTED PER-SHARE DATA 1995 1994 1993 1992 1991
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from Investment Operations .042 .026 .026 .048 .073
Net interest income
Less Distributions (.042) (.026) (.026) (.048) (.073)
From net interest income
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
TOTAL RETURN B 4.28% 2.62% 2.63% 4.93% 7.50%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 573,144 $ 518,657 $ 431,133 $ 542,620 $ 608,394
Ratio of expenses to average net assets .65% .72% .56% A .64% .73%
Ratio of net interest income to average net assets 4.19% 2.59% 3.09% A 4.84% 7.20%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS DO NOT INCLUDE THE ONE TIME SALES CHARGE AND FOR PERIODS OF
LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended February 28, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
Fidelity Select Portfolios (the trust) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust. The trust
has thirty-five equity funds (the fund or the funds) which invest primarily
in securities of companies whose principal business activities fall within
specific industries; and a money market fund which invests in high quality
money market instruments. Each fund is authorized to issue an unlimited
number of shares. The American Gold Portfolio and the Precious Metals and
Minerals Portfolio may also invest in certain precious metals. The
following summarizes the significant accounting policies of the funds:
SECURITY VALUATION:
EQUITY FUNDS. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities (including restricted securities) for which
exchange quotations are not readily available (and in certain cases debt
securities which trade on an exchange), are valued primarily using
dealer-supplied valuations or at their fair value as determined in good
faith following consistently applied procedures under the general
supervision of the Board of Trustees. Short-term securities maturing within
sixty days are valued at amortized cost or original cost plus accrued
interest, both of which approximate current value. Direct investments in
precious metals in the form of bullion are valued at the most recent bid
price quoted by a major bank on the New York Commodities Exchange.
MONEY MARKET FUND. As permitted under Rule 2a-7 of the 1940 Act, and
certain conditions therein, securities are valued initially at cost and
thereafter assume a constant amortization to maturity of any discount or
premium.
FOREIGN CURRENCY TRANSLATION. The accounting records of each fund are
maintained in U.S. dollars. Investment securities and other assets and
liabilities denominated in a foreign currency are translated into U.S.
dollars at the prevailing rates of exchange at period end. Purchases and
sales of securities, income receipts, and expense payments are translated
into U.S. dollars at the prevailing exchange rate on the respective dates
of the transactions.
Effective March 1, 1994, each fund adopted Statement of Position (SOP)
93-4: Foreign Currency Accounting and Financial Statement Presentation for
Investment Companies. In accordance with this SOP, reported net realized
gains and losses on foreign currency transactions represent net gains and
losses from sales and maturities of forward currency contracts, disposition
of foreign currencies, currency gains and losses realized between the trade
and settlement dates on securities transactions, and the difference between
the amount of net investment income accrued and the U.S. dollar amount
actually received. Further, as permitted under the SOP, the effects of
changes in foreign currency exchange rates on investments in securities are
not segregated in the Statement of Operations from the effects of changes
in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment in securities.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, each fund is not subject to income taxes to
the extent that it distributes all of its taxable income for the fiscal
year. The schedules of investments include information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME:
EQUITY FUNDS. Dividend income is recorded on the ex-dividend date, except
certain dividends from foreign securities where the ex-dividend date may
have passed, are recorded as soon as the funds are informed of the
ex-dividend date. Interest income, which includes accretion of original
issue discount, is accrued as earned. Dividend and interest income is
recorded net of foreign taxes where recovery of such taxes is uncertain.
MONEY MARKET FUND. Interest income, which includes amortization of premium
and accretion of discount, is accrued as earned.
EXPENSES. Most expenses of the trust can be directly attributed to a fund.
Expenses which cannot be directly attributed are apportioned between the
funds in the trust.
PREPAID EXPENSES. Each equity fund prepays all expenses for registering
fund shares for distribution under federal and state securities law.
Prepaid expenses are amortized over one year.
DISTRIBUTIONS TO SHAREHOLDERS. Dividends are declared daily and paid
monthly from net interest income for the money market fund. Distributions
are recorded on the ex-dividend date, for all other funds.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
partnerships, non-taxable dividends, net operating losses, litigation,
expiring capital loss carryforwards and losses deferred due to wash sales
and excise tax regulations. The funds also utilized earnings and profits
distributed to shareholders on redemption of shares as a part of the
dividends paid deduction for income tax purposes. Permanent book and tax
basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
REDEMPTION FEES. Shares redeemed from an equity fund are subject to
redemption fees. Shares held less than 30 days are subject to a short-term
redemption fee equal to .75% of the net asset value of shares redeemed.
Shares held 30 days or more are subject to a long-term redemption fee equal
to the lesser of $7.50 or .75% of the net asset value of shares redeemed.
The long-term redemption fee and the first $7.50 of the short-term
redemption fee are accounted for as a reduction of transfer agent expenses.
This portion of the redemption fee is used to offset the transaction costs
and other expenses that short-term trading imposes on
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
REDEMPTION FEES - CONTINUED
each fund and its shareholders. The remainder of the short-term redemption
fee is accounted for as an addition to paid in capital.
There is a $7.50 fee for shares exchanged into another Fidelity fund (see
Note 5 of Notes to Financial Statements). This is in addition to the
applicable redemption fees.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
FORWARD FOREIGN CURRENCY CONTRACTS. The equity funds may use forward
foreign currency contracts to facilitate transactions in foreign securities
and to manage each funds' currency exposure. Contracts to buy generally are
used to acquire exposure to foreign currencies, while contracts to sell are
used to hedge a fund's investments against currency fluctuations. Also, a
contract to buy or sell can offset a previous contract. Losses may arise
from changes in the value of the foreign currency or if the counterparties
do not perform under the contracts' terms.
The U.S. dollar value of forward foreign currency contracts is determined
using forward currency exchange rates supplied by a quotation service.
Purchases and sales of forward foreign currency contracts having the same
settlement date and broker are offset and any realized gain (loss) is
recognized on the date of offset; otherwise, gain (loss) is recognized on
settlement date.
REPURCHASE AGREEMENTS. The funds, through their custodian, receive delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The funds' investment
adviser, Fidelity Management & Research Company (FMR), is responsible for
determining that the value of these underlying securities remains at least
equal to the resale price.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission (SEC), the funds, along with other
registered investment companies having management contracts with FMR, may
transfer uninvested cash balances into a joint trading account. These
balances are invested in one or more repurchase agreements that are
collateralized by U.S. Treasury or Federal Agency obligations.
INTERFUND LENDING PROGRAM. Pursuant to an Exemptive Order issued by the
SEC, the funds, along with other registered investment companies having
management contracts with FMR, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
funds to borrow from, or lend money to, other participating funds.
INDEXED SECURITIES. The funds may invest in indexed securities whose values
are linked either directly or inversely to changes in foreign currencies,
interest rates, commodities, indices, or other underlying instruments. The
funds use these securities to increase or decrease their exposure to
different underlying instruments and to gain exposure to markets that might
be difficult to invest in through conventional securities. Indexed
securities may be more volatile than their underlying instruments, but any
loss is limited to the amount of the original investment.
RESTRICTED SECURITIES. The funds are permitted to invest in privately
placed restricted securities. These securities may be resold in
transactions exempt from registration or to the public if the securities
are registered. Disposal of these securities may involve time-consuming
negotiations and expense, and prompt sale at an acceptable price may be
difficult. At the end of the period, restricted securities (excluding 144A
issues) amounted to $678,125, $3,244,165 and $13,999,806, or 0.2%, 1.4% and
2.4% of the net assets of Biotechnology Portfolio, Software and Computer
Services Portfolio and Money Market Portfolio, respectively.
3. JOINT TRADING ACCOUNT.
At the end of the period, the following funds had 20% or more of their
total investments in repurchase agreements through a joint trading account.
These repurchase agreements were with entities whose creditworthiness has
been reviewed and found satisfactory by FMR. The repurchase agreements were
dated February 28, 1995 and due March 1, 1995. The maturity values of the
joint trading account investments were $50,886,593 for Food and Agriculture
Portfolio, $76,222,871 for Home Finance Portfolio, $37,970,412 for Regional
Banks Portfolio, and $143,675,261 for Biotechnology Portfolio, all at
6.08%. The investments in repurchase agreements through the joint trading
account are summarized as follows:
SUMMARY OF JOINT TRADING
Number of dealers or banks 21
Maximum amount with one dealer or bank 12 1/2%
Aggregate principal amount of agreements $15,952,334,000
Aggregate maturity amount of agreements $15,955,030,324
Aggregate market value of collateral $16,296,226,313
Coupon rates of collateral 0% to 15 3/4%
Maturity dates of collateral 3/1/95 to 2/15/25
4. PURCHASES AND SALES OF INVESTMENTS.
Information regarding purchases and sales of securities (other than
short-term securities) is included under the caption "Other Information" at
the end of each equity fund's schedule of investments.
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As each fund's investment adviser, FMR receives a monthly
fee.
For each equity fund, the monthly fee is calculated on the basis of a group
fee rate plus a fixed individual fund fee rate applied to the average net
assets of each fund. The group fee rate is the weighted average of a series
of rates and is based on the monthly average net assets of all the mutual
funds advised by FMR. The
5. FEES AND OTHER TRANSACTIONS WITH AFFILIATES - CONTINUED
MANAGEMENT FEE - CONTINUED
rates ranged from .2850% to .5200% for the period March 1, 1994 to July 31,
1994, and .2700% to .5200% for the period August 1, 1994 to February 28,
1995. In the event that these rates were lower than the contractual rates
in effect during those periods, FMR voluntarily implemented the above
rates, as they resulted in the same or a lower management fee. The annual
individual fund fee rate is .30%. For the period, the management fee was
equivalent to an annual rate of .62% of average net assets for each equity
fund.
For the money market fund, FMR receives a monthly fee that is calculated on
the basis of a group fee rate plus a fixed individual fund fee rate applied
to the average net assets of the fund and an income-based fee. The group
fee rate is the weighted average of a series of rates and is based on the
monthly average net assets of all the mutual funds advised by FMR. The
rates ranged from .1325% to .3700% for the period March 1, 1994 to July 31,
1994, and from .1200% to .3700% for the period August 1, 1994 to February
28, 1995. In the event that these rates were lower than the contractual
rates in effect during those periods, FMR voluntarily implemented the above
rates, as they resulted in the same or a lower management fee. The annual
individual fund fee rate is .03%. The income based fee is added only when
the fund's yield exceeds 5%. At that time, the fee would equal 6% of that
portion of the fund's gross income that represents a gross yield of more
than 5% per year. The maximum income-based component is .24% (annualized)
of average net assets. For the period, the management fee was equivalent to
an annual rate of .20% of average net assets.
SUB-ADVISER FEE. As the money market fund's investment sub- adviser, FMR
Texas Inc., a wholly owned subsidiary of FMR, receives a fee from FMR of
50% of the management fee payable to FMR. The fee is paid prior to any
voluntary expense reimbursements which may be in effect, and after reducing
the fee for any payments by FMR pursuant to the fund's Distribution and
Service Plan.
SALES LOAD. Fidelity Distributors Corporation (FDC), an affiliate of FMR,
is the general distributor of each fund. FDC is paid a 3% sales charge on
sales of shares of each fund. Prior to October 12, 1990, FDC was paid a 2%
sales charge and a 1% deferred sales charge. Shares purchased before
October 12, 1990 are subject to the deferred sales charge upon redemption
or exchange to any other Fidelity fund (other than Select funds). The
amounts received by FDC for sales charges and deferred sales charges are
shown under the caption "Other Information" on each fund's Statement of
Operations.
TRANSFER AGENT FEE. Fidelity Service Co. (FSC), an affiliate of FMR, is the
funds' transfer, dividend disbursing and shareholder servicing agent.
During the period March 1, 1994 to December 31, 1994, FSC received fees
based on the type, size, number of accounts and the number of transactions
made by shareholders. Effective January 1, 1995, the Board of Trustees
approved a revised transfer agent fee contract pursuant to which FSC
receives account fees and asset-based fees that vary according to account
size. FSC pays for typesetting, printing and mailing of all shareholder
reports, except proxy statements.
ACCOUNTING AND SECURITY LENDING FEES. FSC maintains the funds' accounting
records and administers their security lending program. The security
lending fee is based on the number and duration of lending transactions.
The accounting fee is based on the level of average net assets for the
month plus out-of-pocket expenses.
EXCHANGE FEES. FSC charges an exchange fee of $7.50 to cover administrative
costs associated with exchanges out of an equity fund to any other Fidelity
fund. The exchange fees retained by FSC are shown under the caption "Other
Information" on each fund's Statement of Operations.
BROKERAGE COMMISSIONS. Each equity fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms are shown under the caption
"Other Information" on each fund's schedule of investments.
6. INTERFUND LENDING PROGRAM.
Certain funds participated in the interfund lending program as a borrower.
The maximum loan, average daily loan balances and the weighted average
interest rates, during the periods for which loans were outstanding are as
follows:
AVERAGE WEIGHTED
MAXIMUM DAILY AVERAGE
LOAN LOAN BALANCE INTEREST RATE
Computers Portfolio $32,836,000 $14,692,467 4.0%
Electronics Portfolio $28,856,000 $19,714,500 4.0%
Energy Service Portfolio $20,020,000 $14,261,429 4.6%
Retailing Portfolio $17,178,000 $17,178,000 4.5%
Interest expense includes $24,406, $8,656, $12,675 and $2,161 paid under
the interfund lending program for Computers Portfolio, Electronics
Portfolio, Energy Service Portfolio and Retailing Portfolio, respectively.
Certain funds participated in the interfund lending program as a lender.
The maximum loan, the average daily loan balances and the weighted average
interest rates, during the periods for which loans were outstanding are as
follows:
AVERAGE WEIGHTED
MAXIMUM DAILY AVERAGE
LOAN LOAN BALANCE INTEREST RATE
American Gold Portfolio $21,109,000 $19,072,286 4.0%
Health Care Portfolio $12,452,000 $4,786,500 3.9%
Precious Metals and
Minerals Portfolio $15,357,000 $7,849,667 3.9%
Interest income includes $14,727, $4,190 and $5,087, earned from the
interfund lending program for American Gold Portfolio, Health Care
Portfolio, and Precious Metals and Minerals Portfolio, respectively.
7. SECURITY LENDING.
Certain equity funds loaned securities to certain brokers who paid the fund
negotiated lenders' fees during the period. These fees are included in
interest income. Each fund receives U.S. Treasury
7. SECURITY LENDING FEES - CONTINUED
obligations and/or cash as collateral against the loaned securities, in an
amount at least equal to 102% of the market value of the loaned securities
at the inception of each loan. This collateral must be maintained at not
less than 100% of the market value of the loaned securities during the
period of the loan. For funds with loans outstanding at the period end, the
value of the securities loaned and the value of collateral held are shown
under the caption "Other Information" on each fund's schedule of
investments.
8. BANK BORROWINGS.
Each fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The funds have established
borrowing arrangements with certain banks. Under the most restrictive
arrangement, each fund must pledge to the bank securities having a market
value in excess of 220% of the total bank borrowings. The interest rate on
the borrowings is the bank's base rate, as revised from time to time. At
the period end, the maximum loan and average daily loan balances during the
periods for which loans were outstanding are shown under the caption "Other
Information" on each fund's schedule of investments.
9. EXPENSE REDUCTIONS.
FMR voluntarily limits expenses, excluding interest, taxes, brokerage
commissions and extraordinary expenses of each fund to 2.5% of average net
assets.
In addition, FMR has agreed to reimburse each fund in accordance with a
state expense limitation if, and to the extent that, the total operating
expenses of each fund, excluding interest, taxes, brokerage commissions and
extraordinary expenses, are in excess of specified percentages of the
average net assets of the fund for its fiscal year. The lowest limitation
applicable to the fund is either the lesser of 2.5% of average net assets;
or 2.5% of the first $30 million of average net assets, 2% of the next $70
million and 1.5% of the excess.
FMR retains the ability to be repaid by a fund for these expense
reimbursements in the amount that the expenses fall below the limit prior
to the end of the fiscal year.
The reimbursement under these arrangements amounted to $35,895, $111,215,
$25,374 and $75,680 for Air Transportation Portfolio, Brokerage and
Investment Management Portfolio, Consumer Products Portfolio, and Defense
and Aerospace Portfolio, respectively.
In addition, FMR directed certain portfolio trades to brokers who paid a
portion of the funds' expenses (soft-dollar arrangement). For the period,
the aggregate reductions under this arrangement totalled $837,195.
Funds are not eligible for expense reductions under a soft-dollar
arrangement while under any voluntary or state expense limitation. Funds
may have a combination of any three of the aforementioned expense
reductions during the year.
10. MERGERS.
Pursuant to an Agreement and Plan of Reorganization approved by the
shareholders of Electric Utilities Portfolio at a meeting held on February
16, 1994, Utilities Growth Portfolio (formerly Utilities Portfolio)
acquired substantially all of the assets of the Electric Utilities
Portfolio on February 25, 1994. The acquisition was accomplished by a
tax-free exchange of assets of Electric Utilities Portfolio in exchange for
458,728 shares of Utilities Growth Portfolio (valued at $36.36 per share).
Electric Utilities Portfolio's net assets at that date (valued at
$16,679,364), including $1,838,111 of unrealized appreciation were combined
with those of Utilities Growth Portfolio. The aggregate net assets of
Utilities Growth Portfolio and Electric Utilities Portfolio immediately
before the acquisition were $233,107,469 and $16,679,364, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and the Shareholders of Fidelity Select Portfolios:
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of each
of the thirty-six funds constituting Fidelity Select Portfolios at February
28, 1995, the results of their operations for the year then ended, the
changes in their net assets and the financial highlights for the periods
indicated in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to
as "financial statements") are the responsibility of the Fidelity Select
Portfolios' management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities owned at February 28, 1995 by correspondence
with the custodian and brokers and the application of alternative auditing
procedures where confirmations from brokers were not received, provide a
reasonable basis for the opinion expressed above.
/s/PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Boston, Massachusetts
April 19, 1995
TO THE SHAREHOLDERS
The Board of Trustees of Fidelity Select Portfolios voted to pay on each
fund's pay date, to shareholders of record at the opening of business on
each fund's respective record date, a distribution derived from capital
gains realized from the sale of portfolio securities, and a dividend
derived from net investment income, for each of the following funds:
AMOUNTS PER SHARE
RECORD &
FUND EX-DATE PAY DATE DIVIDENDS CAPITAL GAINS TOTAL REINVESTMENT PRICE
Brokerage and Investment Management 4/13/95 4/17/95 $ - $ .49 $ .49
$15.50
Chemicals 4/7/95 4/10/95 .08 .46 .54 34.56
Computers 4/7/95 4/10/95 - .42 .42 32.54
Consumer Products 4/7/95 4/10/95 - .06 .06 14.37
Developing Communications 4/7/95 4/10/95 - 1.53 1.53 18.93
Energy 4/13/95 4/17/95 - .06 .06 16.92
Food and Agriculture 4/7/95 4/10/95 .03 .52 .55 33.01
Health Care 4/7/95 4/10/95 .05 .36 .41 78.88
Industrial Equipment 4/13/95 4/17/95 .01 - .01 22.14
Industrial Materials 4/13/95 4/17/95 .04 - .04 23.99
Insurance 4/7/95 4/10/95 .04 - .04 21.80
Leisure 4/13/95 4/17/95 - .29 .29 41.84
Medical Delivery 4/7/95 4/10/95 - .07 .07 24.17
Natural Gas 4/13/95 4/17/95 .01 - .01 9.56
Paper and Forest Products 4/13/95 4/17/95 - .21 .21 21.37
Technology 4/13/95 4/17/95 - 1.38 1.38 44.52
Telecommunications 4/13/95 4/17/95 - .82 .82 38.89
Utilities Growth 4/7/95 4/10/95 .05 - .05 35.68
FEDERAL TAX STATUS
Dividend and capital gain distributions will be taxable regardless of
whether you take them in cash or in additional shares. You will be notified
at a later date as to the tax treatment of these distributions and
dividends. If you receive additional shares, the amount received should be
treated as an additional purchase and added to your cost basis.
The reinvestment price is the 10:00 A.M. price on each fund's ex-date.
NOTE: IF YOUR ACCOUNT IS A FIDELITY PROTOTYPE RETIREMENT PLAN SUCH AS AN
INDIVIDUAL RETIREMENT ACCOUNT (IRA), A KEOGH PLAN, A 403(B), OR A QUALIFIED
PENSION OR PROFIT SHARING PLAN, THE ABOVE DATA IS PROVIDED FOR
INFORMATIONAL PURPOSES ONLY AND IS NOT REPORTABLE FOR TAX PURPOSES IN 1995.
STATISTICAL ROUNDUP: FIDELITY SELECT PORTFOLIOS(REGISTERED TRADEMARK)
LEGEND
TOTAL RETURNS include change in share price and reinvestment of dividends
and capital gains. CUMULATIVE TOTAL RETURNS do not reflect Select's 3%
sales charge. However, each Fund Update includes load-adjusted cumulative
total returns. AVERAGE ANNUAL RETURNS are load-adjusted. Average Annual
Returns assume a steady compounded rate of return and are not year-by-year
results, which fluctuated over the periods shown. LIFE OF FUND figures are
from commencement of operations to February 28, 1995.
Figures for the S&P 500(registered trademark), an unmanaged index of common
stock prices, include reinvestment of dividends. S&P 500 is a registered
trademark of Standard & Poor's Corporation.
If the advisor had not reimbursed certain expenses for some of the funds
during the periods shown, those funds' returns would have been lower. Air
Transportation, Brokerage and Investment Management, Consumer Products and
Defense and Aerospace received reimbursement from the advisor for the year
ended February 28, 1995. Expense reimbursements may be revised at any time.
All performance numbers are historical; each equity fund's share price and
return will vary and shareholders may have a gain or loss when they sell
their shares.
VOLATILITY
Volatility measures the variability of a return from its mean, in terms of
STANDARD DEVIATIONS. (Standard deviation measures the variation from the
mean for a series of numbers.) Measures of volatility are based on
historical performance and seek to compare each fund's relative share price
fluctuations or total returns compared to the S&P 500. (Volatility measures
are not calculated for funds which are less than three years old.)
Volatility measures are given to investors to assist in determining the
historical risk versus return relationship between the fund and a benchmark
index. THE CALCULATIONS ARE NOT MEANT TO PREDICT PERFORMANCE and may change
quickly as fund composition and company fundamentals change.
A fund's RELATIVE VOLATILITY is a ratio that compares the fund's volatility
to the volatility of a benchmark index, such as the S&P 500. By definition,
the S&P 500 has a relative volatility of 1.0. A fund with a relative
volatility greater than 1.0 has had returns that have been more variable
than those returns of the benchmark index, while a fund with a relative
volatility less than 1.0 would have had less volatility than the benchmark
index.
MEDIAN PRICE/SALES
This figure represents the median price-to-sales ratio for all the stocks
in a fund on a given date. A stock's price-to-sales ratio compares the
company's market value with its total revenue. The ratio is calculated by
dividing the stock price by the most recent 12 months' revenues per share.
All price-to-sales ratios are from company 10Q filings. Excluded from the
median price/sales calculations are foreign companies without ADRs
(American Depository Receipts), IPOs (Initial Public Offerings) and certain
financial companies. As a result, figures are not available for Precious
Metals and Minerals Portfolio.
MEDIAN PRICE/BOOK
This figure represents the median price-to-book ratio of all the stocks in
a fund on a given date. A stock's price-to-book ratio compares the
company's market value with its book value or net asset value. The ratio is
calculated by dividing the stock price by the book value per share. All
price-to-book ratios are from company 10Q filings. Excluded from the median
price/book calculations are foreign companies without ADRs and certain
financial companies. As a result, figures are not available for Precious
Metals and Minerals Portfolio.
STATISTICAL ROUNDUP(DAGGER) (UNAUDITED)
CUMULATIVE TOTAL RETURNS AVERAGE ANNUAL RETURNS OPENING CLOSING
FOR PERIODS ENDED 2/28/95 FOR PERIODS ENDED 2/28/95 NAV NAV
YTD 1 YEAR LIFE OF FUND 1 YEAR 5 YEARS LIFE OF FUND 3/1/94 2/28/95
Air Transportation (12/16/85) 12.07% -12.45% 91.85% -15.08% 7.32% 6.98% $
17.12 $13.93
American Gold (12/16/85) -7.38 -18.62 87.12 -21.06 0.14 6.69 22.66 18.44
Automotive (6/30/86) 2.48 -12.59 181.58 -15.21 16.27 12.28 25.48 19.84
Biotechnology (12/16/85) 8.07 -8.37 243.84 -11.12 17.05 13.97 27.61 25.30
Brokerage and Investment Mgmt. (7/29/85) 2.44 -12.62 110.92 -15.24 14.81
7.75 17.75 15.51
Chemicals (7/29/85) 3.04 9.90 394.52 6.60 14.90 17.75 31.66 33.91
Computers (7/29/85) 4.57 13.51 256.75 10.10 22.43 13.81 27.02 30.67
Construction and Housing (9/29/86) 5.27 -12.54 154.39 -15.17 12.70 11.32
19.82 16.79
Consumer Products (6/29/90) 1.53 -4.59 74.97 -7.45 - 11.98 15.24 13.91
Defense and Aerospace* (5/8/84) 7.21 4.13 124.36 1.01 11.77 7.45 19.14
19.64
Developing Communications (6/29/90) 0.79 13.63 161.21 10.22 - 22.01 19.65
20.40
Electronics (7/29/85) 7.08 12.05 134.30 8.69 21.31 8.93 17.67 19.80
Energy* (7/14/81) 1.45 0.04 128.25 -2.96 2.19 6.00 16.73 16.10
Energy Service (12/16/85) 7.45 7.60 26.21 4.37 -0.06 2.22 11.66 11.97
Environmental Services (6/29/89) 1.38 -13.91 10.60 -16.50 -0.30 1.25 11.93
10.27
Financial Services* (12/10/81) 11.85 4.72 706.87 1.58 17.74 16.83 51.24
48.23
Food and Agriculture (7/29/85) 6.31 10.14 409.09 6.83 14.41 18.11 31.49
32.53
Health Care* (7/14/81) 7.53 31.24 1,204.49 27.30 21.27 20.45 63.31 76.13
Home Finance (12/16/85) 12.14 12.43 396.76 9.06 26.95 18.62 25.03 23.92
Industrial Equipment (9/29/86) 2.40 -1.93 115.54 -4.87 11.52 9.15 20.61
20.04
Industrial Materials (9/29/86) 5.33 7.65 146.97 4.42 12.54 10.93 21.67
23.13
Insurance (12/16/85) 6.76 9.79 170.98 6.50 12.37 11.06 19.41 21.31
Leisure* (5/8/84) 6.38 -1.07 497.49 -4.04 13.09 17.63 45.30 40.71
Medical Delivery (6/30/86) 5.99 19.63 216.92 16.04 21.70 13.82 20.28 23.18
Multimedia (6/30/86) 5.28 9.35 268.28 6.07 16.47 15.81 23.87 22.35
Natural Gas (4/21/93) 3.22 -5.06 -8.70 -7.91 - -6.32 9.48 8.98
Paper and Forest Products (6/30/86) 9.19 14.91 162.98 11.46 14.90 11.40
19.61 21.14
Precious Metals and Minerals* (7/14/81) -13.63 -6.86 86.26 -9.65 2.15 4.43
16.62 15.27
Regional Banks (6/30/86) 10.63 7.79 217.37 4.55 19.78 13.84 17.99 18.01
Retailing (12/16/85) 0.13 -4.01 290.27 -6.89 16.33 15.55 24.91 23.91
Software and Computer Services (7/29/85) 6.52 1.97 378.68 -1.09 22.64 17.35
28.89 29.07
Technology* (7/14/81) 1.67 4.61 491.33 1.47 21.09 13.66 41.83 42.05
Telecommunications (7/29/85) 2.29 7.98 411.18 4.74 13.78 18.16 37.10 38.34
Transportation (9/29/86) 6.43 5.90 224.95 2.72 16.16 14.60 21.67 20.53
Utilities Growth*(diamond) (12/10/81) 5.44 0.21 525.12 -2.79 8.61 14.59
36.61 34.88
S&P 500 6.59 7.36 - 7.36 11.35 - 467.14 487.39
* Ten-year Average Annual Total Returns for the period ended 2/28/95 for
these funds were as follows: Defense and Aerospace = 5.00%; Energy = 7.05%;
Financial Services = 13.51%; Health Care = 19.82%; Leisure = 15.59%;
Precious Metals and Minerals = 6.43%; Technology = 9.17%; Utilities Growth
= 12.83%.
(dagger) See "Legend" on page for explanation of information on this
table.
(dagger)(dagger) Total net assets are based on 4:00 p.m. prices.
(diamond) Formerly Utilities
** High/Low NAVs are based on 4:00 p.m. prices for the period 3/1/94 -
2/28/95.
HIGH LOW TOTAL NET ASSETS(DAGGER)(DAGGER) DISTRIBUTIONS MEDIAN MEDIAN
NAV** NAV** $MM 1/1/94-12/31/94 PRICE/SALES PRICE/BOOK
FOR 12 MONTHS ENDED 2/28/95 2/28/94 2/28/95 CAP GAINS DIVS RELATIVE
VOLATILITY AS OF 2/28/95
$17.25 $11.99 $ 11.0 $18.6 $31.09 $ - 2.06 $0.51 $2.34
23.97 17.83 347.4 278.2 - - 3.06 3.61 2.98
26.01 18.01 228.7 60.1 2.26 0.05 1.54 0.69 2.86
27.41 22.54 481.1 448.2 - - 2.41 7.90 3.24
17.62 14.37 59.8 27.3 - - 2.08 0.84 1.49
35.79 30.29 62.2 97.5 0.60 0.22 1.38 0.87 2.70
31.11 23.79 120.4 215.0 - - 2.26 1.08 2.63
20.17 15.07 81.0 16.9 0.52 - 1.53 0.73 1.83
15.38 12.91 8.4 20.5 0.60 - 1.41 1.60 4.62
19.64 17.43 11.1 5.0 0.27 - 1.40 0.51 1.91
20.74 15.25 222.1 254.4 1.67 - 2.09 2.15 3.95
19.87 15.86 111.0 216.4 - - 1.93 2.03 3.37
17.90 15.39 145.5 96.0 0.54 0.08 1.85 1.04 2.01
12.50 10.61 40.9 63.8 0.48 0.02 2.14 1.21 1.69
11.85 9.62 66.0 31.3 - - 1.70 1.20 1.88
54.93 41.61 116.2 153.1 3.93 0.79 1.74 0.97 1.54
32.69 28.20 95.0 197.1 1.85 0.08 1.05 0.84 3.07
76.90 58.13 522.9 943.1 5.74 0.62 2.00 1.48 2.39
27.74 20.99 155.6 229.9 3.60 0.12 1.85 1.22 0.96
20.92 17.73 206.0 110.0 0.16 0.01 1.50 0.69 2.22
23.82 20.73 155.7 183.5 - 0.18 1.49 0.85 2.18
21.31 18.17 18.4 21.8 - - 1.41 0.87 1.40
45.73 36.25 105.8 69.6 3.93 - 1.39 1.76 3.12
23.73 19.22 188.6 299.6 0.89 0.06 2.36 1.45 3.23
24.27 19.00 49.2 38.2 3.21 - 1.48 1.47 2.52
10.05 8.41 63.1 79.9 - 0.02 - 1.04 1.70
21.90 16.42 66.9 94.2 1.17 - 2.00 0.76 1.92
20.33 14.60 409.2 364.2 - 0.23 3.40 - -
19.85 16.27 97.4 164.6 0.98 0.29 1.70 1.46 1.41
25.90 22.85 52.8 31.1 - - 1.57 0.46 2.37
29.39 19.81 178.0 236.4 0.33 - 2.42 3.50 4.84
44.41 34.13 202.5 229.8 1.50 - 1.98 1.32 2.98
39.95 34.86 371.0 369.5 1.27 0.33 1.43 1.65 2.76
22.23 17.94 13.1 12.7 2.19 - 1.33 0.79 2.41
36.88 32.95 250.5 237.6 0.67 1.05 1.08 1.08 1.44
488.11 438.92 - - - - - 0.97 3.24
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
INVESTMENT SUB-ADVISERS
Fidelity Management & Research
FMR Texas Inc., Irving, TX
Fidelity Management & Research
(U.K.) Inc., London, England
Fidelity Management & Research
(Far East) Inc., Tokyo, Japan
OFFICERS
Edward C. Johnson 3d, PRESIDENT
J. Gary Burkhead, SENIOR VICE PRESIDENT
William J. Hayes, VICE PRESIDENT
Arthur S. Loring, SECRETARY
Stephen P. Jonas, TREASURER
Thomas D. Maher, ASSISTANT VICE PRESIDENT, MONEY MARKET FUND
John H. Costello, ASSISTANT TREASURER
Leonard M. Rush, ASSISTANT TREASURER
Michael D. Conway, ASSISTANT TREASURER, MONEY MARKET FUND
Robert H. Morrison, MANAGER, SECURITY TRANSACTIONS
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIANS
Brown Brothers Harriman & Co.
Boston, MA
and
The Bank of New York
New York, NY
CORPORATE HEADQUARTERS
82 Devonshire Street
Boston, MA 02109
1-800-544-8888
* INDEPENDENT TRUSTEES
FIDELITY SELECT PORTFOLIOS
CONSUMER SECTOR
Consumer Products
Food and Agriculture
Leisure
Multimedia
Retailing
CYCLICALS SECTOR
Air Transportation
Automotive
Chemicals
Construction and Housing
Environmental Services
Industrial Equipment
Industrial Materials
Paper and Forest Products
Transportation
ENERGY, UTILITIES & NATURAL RESOURCES SECTOR
American Gold
Energy
Energy Service
Natural Gas
Precious Metals and Minerals
Utilities Growth
FINANCIAL SERVICES SECTOR
Brokerage and Investment Management
Financial Services
Home Finance
Insurance
Regional Banks
HEALTH CARE SECTOR
Biotechnology
Health Care
Medical Delivery
TECHNOLOGY SECTOR
Computers
Defense and Aerospace
Developing Communications
Electronics
Software and Computer Services
Technology
Telecommunications
Money Market
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0111
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
AUTOMATED LINES FOR QUICKEST SERVICE
FIDELITY INVESTMENTS
P.O. Box 193
BOSTON, MA 02101
BULK RATE
U.S. Postage
PAID
Fidelity
Investments
